Division  HC 135 
Section  • B3 


Digitized  by  the  Internet  Archive 
in  2016 


https://archive.org/details/mexicanproblem00barr_0 


hoofed  tip  C.  W.  •Sarron 

Manager  of  the  Wall  Street  Journal,  Boston 
News  Bureau,  and  Philadelphia  News  Burbau 

r 

THE  MEXICAN  PROBLEM 
THE  AUDACIOUS  WAR 

TWENTY-EIGHT  ESSAYS  ON  THE  FEDERAL 
RESERVE  ACT 


THE  MEXICAN  PROBLEM 


A PETROLEUM  CAMP  IN  MEXICO 


THE  MEXICAN 
PROBLEM 

, ( APR  30  191  f 

By  ^Qogical  SB® 

CLARENCE  W.  BARRON 


WITH  INTRODUCTION  BY 
TALCOTT  WILLIAMS,  LL.D. 


BOSTON  AND  NEW  YORK 
HOUGHTON  MIFFLIN  COMPANY 
(Cbe  ftitiersibe  press  <£ambrib(je 

1917 


COPYRIGHT,  I917,  BY  CLARENCE  W.  BARRON 
ALL  RIGHTS  RESERVED 


Published  July  IQ17 


“A  AMERICA  LOCA” 

By  SANTOS  CHOCANO 

Peruvian,  and  Colonel  in  the  Constitutionalist  Army  in  Mexico 
{Late  1913) 

Peoples  tumultuous.  Feverish  countrysides. 

Latin  America,  sunstruck  and  mad. 

(Prehistoric) 

Empires  decked  in  the  pomp  of  the  warrior,  blinded  with 
luxury,  deafened  by  sound, 

Stolid  priests  hacking  out  entrails  and  viscera  — wild 
sacrifices  to  Gods  of  the  mound. 

Martinet  masters  who  drag  out  the  hours  in  low  sensuali- 
ties foreign  to  Love, 

Fatuous  peoples  all,  like  to  their  posts:  heartless,  whom 
only  their  fancies  can  move. 

(1520) 

Then  arrives  Spain  with  her  cross  and  her  sorrows,  after 
her  centuries  seven  of  strife. 

Phantomlike  multitudes  (fair  gods  on  horses)  lay  waste 
the  Andes  and  strip  them  of  life. 

Pizarro  and  Almagro  cross  their  keen  rapiers  in  fratricide 
strife  that  runs  on  till  to-day  — 

Hernan  Cortez  in  the  arms  of  Marina,  mingles  two  bloods 
that  are  marked  for  decay. 

Offspring,  a Gryphon;  futile,  insane  — 

Eagle  of  feather,  and  lion  of  mane. 

Moorish  depression  comes  out  of  the  desert,  clinging  all 
time  to  the  strange  Spanish  horse. 

Wailing,  its  sadness  finds  echo  in  Andes,  mountains  now 
silent  and  dumb  with  remorse. 


VI 


A AMERICA  LOCA 


Back  of  the  priest  and  his  furious  ritual,  Inquisitorial  phan- 
toms arise. 

Then,  amid  suffering,  hunger  and  misery,  flourishes  Caste, 
built  on  terror  and  lies. 

(1580) 

Fray  de  las  Casas  by  mad  liberation  loads  on  America 
burdens  more  great; 

Blood  of  the  African  now  is  commingled  with  that  of  the 
Gryphon,  the  curse  of  the  State. 

This  new  decadence  gives  flowers  anaemic,  rich  in  their 
color,  but  odorless,  stale; 

Women  inspiring  but  sensual  agonies;  bards  who  in  all 
but  their  fantasies  fail. 

(1520-1810) 

Cycles  of  history  reading  like  fairy  tales;  viceregal  bril- 
liance of  color  and  tone. 

O the  adventures  of  silvery  eventides ! Silken  rope-ladder 
and  Moorish  balcon  — 

Falsest  of  vows  given  — furtivest  coquetry  — heads  nod- 
ding “Yes”  to  the  tryst  of  the  slayer  — 

Swords  sacrilegiously  hiss  from  their  sheathes  in  the  very 
Cathedral  and  break  off  the  prayer. 

All  the  vile  elegance,  then  of  Don  Juan  — 

Piety,  decency,  sanity,  gone. 

(1810) 

Prophets,  self-styled,  raise  the  grito  of  Liberty.  Over  one 
century,  lost  are  their  cries. 

(1913) 

Comes,  now,  this  meaningless,  bloodletting  orgy,  from 
which  our  Lord  God  turns  his  pitying  eyes. 

Peoples  tumultuous.  Lands  of  hot  fever. 

Latin  America,  sunstruck  and  mad. 


FOREWORD 


This  old  globe  is  now  belted  with  battle,  in  the 
greatest  war  that  ever  was  or  ever  can  be,  to 
settle  the  problem  of  the  brotherhood  of  man 
and  of  nations. 

When  the  smoke  shall  have  cleared  away, 
there  will  be  a new  day  for  the  whole  world,  and 
a new  meaning  to  Christian  brotherhood,  as 
there  will  be  a brotherhood  of  nations  for  the 
first  time  in  human  history. 

In  the  future,  national  disorder  must  not  be 
allowed  anywhere  in  the  world,  for  it  leads  to 
international  disorder. 

The  idea  that  Mexico  is  a land  to  be  exploited 
by  foreign  princes  passed  away  with  Maximilian. 
The  idea  that  it  is  to  be  exploited  for  the  bene- 
fit of  the  United  States  must  soon  go  by  the 
boards,  if  it  has  not  already  gone. 

What  is  wanted  is  a clear  path  to  extend  help 
to  Mexico  — Mexico  in  its  normal  disorder, 
moral,  social,  financial,  and  political. 

As  a student  of  the  war  and  human  progress, 
I went  to  Mexico  to  study  the  oil  situation.  I 
came  back  with  something  more  important  — 


vm 


FOREWORD 


“The  Mexican  Problem.”  Seeking  its  solution, 
where  I had  failed  to  find  it  in  railroad,  agricul- 
tural, or  mining  development,  I found  it  in  oil, 
because  oil  at  the  seacoast  could  give  develop- 
ment from  high  wages  without  making  sudden 
upset  of  the  economic  structure  of  the  country. 

The  United  States  had  the  first  Mexican  prob- 
lem when  it  acquired  from  Mexico  the  Pacific 
Coast.  It  found  the  solution  in  gold;  “gold  at 
foot  of  tree,”  in  the  river-beds  and  banks  and 
valleys.  Gold  paid  high  wages  to  him  who  could 
wash  it  out.  It  returned  high  wages  for  supplies. 
It  invited  roads  across  the  continent,  knitting 
this  old  Mexican  territory  into  civilization  and 
the  Union. 

The  solution  was  Business  with  a big  B.  Agri- 
culture followed.  Agriculture  is  not  business. 
Agriculture  is  just  existence.  Business  is  ex- 
panding wages  all  around,  — wages  to  labor, 
wages  to  capital;  incentive  to  labor  to  accumu- 
lation, to  luxury  — luxury  of  freedom  in  body 
and  mind  — freedom  to  move  the  body  from 
place  to  place  and  exercise  the  mind  by  human 
touch  and  contact! 

Economic  production  is  production  in  quan- 
tity. Exchange  of  surplus  follows.  This  is  com- 
merce. But  the  fruit  of  commerce  must  not  be 


FOREWORD 


IX 


wholly  sordid  accumulation.  There  must  be 
fruitage  and  interchanged  ideas  and  customs. 
There  must  follow  mental  development. 

Man  if  alone  on  the  ground  is  below  the  brute. 
He  is  slave  to  the  soil,  which  will  yield  him  food 
only  by  the  sweat  of  his  brow.  Then  he  must 
store  it  and  cook  it  and  clothe  and  shelter  him- 
self. Nature  clothes  and  shelters  all  other  ani- 
mals and  satisfies  their  taste  with  raw  food. 
Why  so  cruel  to  man?  Only  to  be  kind. 

Man  must  work.  God  works;  angels  work; 
devils  work.  There  is  no  redemption  for  man, 
there  is  no  progress  for  man  or  woman,  except 
by  labor  — labor  of  heart,  mind  and  hand.  La- 
bor of  the  hand  must  be  first;  it  purifies  the 
blood  coursing  through  brain  and  heart.  Labor 
of  the  mind  must  follow  that  the  hand  may  be 
directed;  and  labor  of  the  heart  must  come  in 
that  hand  and  mind,  by  commerce  and  thought, 
may  rightly  touch  its  fellow.  Only  thus  mutu- 
ally can  there  be  health,  help,  and  progress. 

No  other  animal  has  luxury,  better  food,  or 
better  shelter,  whether  there  are  thousands  or 
millions  more.  But  man  may  have  progress  by 
every  other  man.  The  more  thousands  the  bet- 
ter each  may  be,  and  the  more  millions  in  hu- 
manity the  greater  and  the  more  important  the 


X 


FOREWORD 


individual  man.  Negative  this  proposition  and 
the  universe  of  man,  of  humanity,  is  ended. 

All  other  animals  in  pairs,  families,  or  groups 
may  be  independent;  men  and  likewise  nations 
never  can  be.  The  chick  chips  its  shell  and  in- 
stantly picks  its  food.  Man  must  be  led  and 
taught.  Animals  have  instinct.  Men  are  denied 
it  that  they  may  know  their  fellow  men. 

Independence,  individually  and  nationally,  is 
passing  away.  The  inventions,  the  mechanism, 
the  arts,  for  man’s  progress  are  all  here.  The 
way  is  now  open.  Human  slavery,  serfdom, 
peonage,  are  passing.  Democracy  is  rising.  The 
last  great  struggle  is  on  and  fourteen  nations  and 
forty  problems  are  in  it.  But  it  is  all  one,  - — hu- 
man freedom  that  man  may  know  his  fellow  and 
that  mutual  helpfulness  may  arise,  individu- 
ally, collectively,  nationally. 

Independence  Day  must  take  on  a new  mean- 
ing. National  independence  is  hereafter  pos- 
sible only  by  national  interdependence. 

America  was  opened  in  the  desire  for  mental 
freedom.  Here  was  born  political  freedom,  des- 
tined to  encircle  the  world  in  little  more  than  a 
hundred  years.  Here,  too,  were  struck  down  the 
shackles  from  human  hands  laboring  in  slavery. 
From  freedom  of  hand  and  mind  America  must 


FOREWORD 


xi 


go  forward,  is  going  forward,  in  freedom,  with 
heart  pulsating  for  universal  political  freedom. 

Human  liberty  can  be  maintained  on  this 
planet  only  by  coordination  of  hand,  of  mind, 
of  heart. 

The  heart  of  America  is  now  expanding,  east, 
west,  and  north;  Japan  and  Australia,  west; 
Canada  and  the  British  Isles  to  the  north; 
France,  Italy,  Russia,  our  Allies,  east!  Can  we 
forget  Mexico,  our  nearest  brother  south?  And 
she  has  so  much  to  give  us;  fruit  of  the  tropics, 
mineral  and  oil,  wealth  of  a continent  compressed 
into  an  isthmus,  capacity  for  the  happy,  health- 
ful, helpful  labor  of,  not  fifteen  million,  but  fifty 
million  people!  And  we  so  much  to  give  her, 
the  fruit  of  our  political,  social,  mental,  and 
machinery  progress;  our  arts,  chemistry,  and 
financial  and  commercial  systems!  Of  natural 
wealth  she  has  abundance.  Of  helping  hands, 
kindly  direction,  and  organization  she  has  woe- 
ful need.  And  who  is  neighbor  to  him  that  hath 
need? 

After  studying  on  both  sides  of  the  Atlantic 
the  foundation  causes  for  the  war  beginning  in 
1914, 1 presented  the  economic  truth  in  The  Au- 
dacious War:  tariff  causes,  desire  for  territory  and 


FOREWORD 


xii 

spheres  of  influence,  dominion  of  overland  and 
water  routes  that  trade  might  expand;  lack  of 
national  morality,  and  “The  Will  to  Power.” 
I thought  I knew  and  understood  it  all. 

Late  in  1916  I dropped  in  upon  Dr.  Talcott 
Williams,  as  he  spoke  at  the  civic  forum  in 
Brookline,  Massachusetts.  I wanted  to  get  his 
measure  and  divine  what  line  of  talent  he  might 
be  turning  out  at  Columbia  for  financial  jour- 
nalism. To  my  astonishment  I got  a new  angle 
from  which  to  view  my  own  ignorance  as  to  the 
causes  of  modern  wars.  I had  thought  that, 
while  economic  conditions  were  basal  under  Ger- 
many’s most  audacious  war  and  Russia’s  long- 
continued  preparation  for  defense,  certainly  race 
and  religion  were  at  the  root  of  troubles  in  the 
Balkans,  in  Turkey,  and  the  Far  East.  But  here 
again  was  the  everlasting  “bread-and-butter 
problem”  or  bread,  even  without  butter,  prob- 
lem. 

Dr.  Williams  showed  from  first-hand  knowl- 
edge, and  fifty  years’  reflection  thereon,  that 
our  boasted  Christian  civilization,  whatever  it 
might  be  in  its  endings,  was  in  its  beginnings 
the  disrupter  of  states  and  nations;  that  where 
villages  and  communities  in  the  Balkans,  in  Tur- 
key, in  Africa,  and  in  the  Far  East  had  existed 


FOREWORD 


xiii 

in  comparative  peace  for  centuries  and  had  their 
parchment  records  and  title  deeds  older  than 
any  in  modern  Europe,  their  whole  economic 
bread-and-butter  fabric  had  been  upset  by  goods 
“made  in  Germany”;  cheaper  manufactures 
from  Vienna;  the  Armenian  had  let  in  the  Chris- 
tian banker  and  out  went  the  home-current  wares 
to  foreign  markets,  while  back  came  the  foreign 
goods  destroying  local  hand  industries,  with  no 
economic  substitution  giving  local  employment. 
The  Mohammedan  traced  the  trade  connection 
and  started  to  kill  the  Armenians,  whose  Chris- 
tian friends  had  taken  away  their  livelihood. 
Vienna  and  Berlin  goods  also  upset  the  business 
base  in  the  Balkans.  The  people  could  not  pay 
the  Turkish  tax  exactions.  On  came  the  lash;  and 
Germany  found  profit  in  selling  the  guns  that 
responded.  The  outside  world  opened  Man- 
churia, and  where  peace  had  reigned  for  hun- 
dreds of  years  nobody  had  since  been  able  to 
maintain  law  or  order.  The  Boxer  Rebellion  was 
a similar  economic  protest. 

There  was  only  one  possible  remedy.  The  old 
order  could  not  be  put  back.  The  nations  must 
unite  and  go  forward.  They  must  insure  develop- 
ment by  organization,  capital,  and  modern  ma- 
chinery, which  could  exist  only  with  courts  of 


XIV 


FOREWORD 


justice  enforcing  laws,  order,  and  contracts.  No 
other  route  was  visible  for  either  national  or  in- 
ternational peace. 

When  the  demand  became  emphatic  that  my 
articles  on  Mexico,  its  oil  fields,  and  its  so- 
cial, political,  and  economic  problems  take  book 
form,  I naturally  turned  to  Dr.  Williams  to  ask 
if  he  would  set  this  forth  in  a preface  with  the 
conclusions  he  had  reached  for  the  problem 
Mexico  presents  to-day  before  the  world. 

C.  W.  Barron 

Boston,  July  It  1917 


PREFACE 


These  articles  on  the  “ Mexican  Problem,”  by 
Mr.  C.  W.  Barron,  are  to  my  mind  a clear 
and  wise  economic  picture  of  Mexico,  beyond 
any  others  that  I have  read  — and  there  is  very 
little  of  the  recent  literature  of  Mexico  which 
I have  not  read  or  examined. 

Not  one  so  grasps  the  clear,  strong  fact  that 
Mexico  is  a hell  on  earth  because  Mexico  has  no 
law,  save  here  and  there  for  the  brief  season 
that  some  man  keeps  law  and  order  to  feed  his 
own  ambition  to  be  an  irresponsible  ruler  and 
possess  present  power  and  the  possibility  of 
future  wealth. 

It  is  forty  years,  to  a few  weeks,  since,  as  the 
correspondent  of  the  New  York  Sun  at  Wash- 
ington, I walked  one  night  into  the  house  of  the 
Mexican  Minister  at  Washington,  and  told  him 
— he  had  n’t  had  the  final  news  — that  all  was 
over  with  Lerda,  the  new  successor  of  Juarez, 
who  had  sent  him  to  Washington,  and  that  Diaz 
was  in  control.  I saw  once  more  the  most  bitter 
sorrow,  the  most  bitter  pang  of  hopeless  grief  a 
man’s  face  can  mirror  — despair  for  the  future  of 


XVI 


PREFACE 


one’s  own  land.  In  my  life  I have  seen  this  look 
in  the  face  of  Hungarian,  Italian,  Pole,  Cuban, 
through  a long  list  of  lands,  down  to  a Mexican 
on  the  day  I write  these  lines. 

In  the  forty  years  since  I saw  Sefior  Mariscal 
grip  the  arms  of  his  chair,  his  knuckles  whitening 
and  his  dark  face  turning  a paling  gray,  I have 
never  in  all  the  many  pages  I have  written  on 
Mexico,  and  many  another  troubled  land,  had  a 
shadow  of  doubt  that  Mexico  would  be  where 
Mexico  is  to-day,  as  these  letters  tell,  with  car- 
tridges for  currency,  because  my  boyhood  and 
the  dawning  fact,  thought,  and  writing  which  led 
to  journalism  were  passed  in  southern  Turkey 
between  the  Tigris  and  Euphrates,  where  the 
grim  problem,  which  has  wrapped  the  world  in 
universal  war,  was  at  its  beginning  of  the  mani- 
fold hopes  which  have  left  but  ashes. 

I was  a missionary’s  son  and  my  father,  the 
Reverend  W.  F.  Williams,  sent  forth  by  the 
A.B.C.F.M.,  had  that  unusual  thing  in  a mis- 
sionary, an  engineer’s  training  with  the  knowl- 
edge of  the  mineralogist.  The  wide  world  was 
full  of  the  rosy  belief  that,  as  in  the  United 
States  and  in  Europe  west  of  the  Vistula,  the 
economic  basis  of  life  was  visibly  rising  like  a 
new  continent  of  human  cheer  and  happiness, 


PREFACE 


XVII 


lifted  by  the  forces  of  invention,  steam  power, 
and  individual  initiative,  so  all  the  world  was  to 
rise  in  like  manner  and  measure.  When  in  our 
long  rides  over  the  mountains  which  rim  Meso- 
potamia north  and  east,  whose  valleys  feed  its 
boundary  rivers,  boy-like,  I brought  him  a split 
pebble  of  malachite,  the  rhomb  of  carbonate 
of  iron,  the  shining  black  cubes  of  galena,  the 
short  staple  of  a cotton  boll  borne  breast  high  as 
we  camped  by  a rushing  stream,  and  he  worked 
out  its  possible  water  power,  or  I took  lessons  at 
a village  loom  — he  was  prophesying  the  eco- 
nomic expansion  to  come.  I do  no  despite  to 
his  flaming  zeal  for  souls  when  I record  that  I 
never  saw  his  face  beam  as  when  he  taught  one  of 
his  converts  how  to  make  sulphuric  acid  with  the 
unmined  sulphur  deposit  of  Mosul,  and  the  man 
improved  on  the  process  in  Ure’s  Dictionary, 
that  com  pend  of  fifty  years  ago. 

The  copper  and  the  lead,  he  pointed  out  to  me, 
the  oil  which  rainbowed  some  streams  on  what  is 
now  the  edge  of  the  Kerkuk  oil  fields,  are  still 
undeveloped.  This  convert’s  tiny  plant  was 
stopped  because  it  might  lead  to  the  easier 
making  of  explosives.  But  the  good  man’s  two 
sons  are  thriving  business  men  — not  in  Mosul 
opposite  Nineveh,  but  in  Providence,  Rhode 


XV111 


PREFACE 


Island.  My  father’s  economic  vision  has  never 
taken  solid  shape.  Like  visions,  the  world  over, 
have  been  blasted.  Why?  Because  economic 
development  necessarily  rests  on  courts  that 
enforce  contracts  and  on  order  that  makes  sav- 
ings safe  and  provides  better  currency  than 
cartridges,  Mexico’s  popular  legal  tender  to- 
day. Credits  are  only  possible  when  contracts 
are  enforced.  Men  will  work  with  industry 
only  where  wages  and  property  are  protected. 
See  how  Mr.  Barron  describes  the  fashion  in 
which  the  brief  and  uncertain  economic  protec- 
tion of  an  American  plant  has  turned  the  peon 
into  a steady  oil-producer,  self-directed,  in  a 
great  and  complex  plant. 

If  there  are  no  courts  that  men  can  trust,  there 
can  be  no  credits  or  contracts.  If  these  are  not, 
neither  capital  nor  wages  come.  Once,  in  the 
seventeenth  and  eighteenth  century,  even  for  a 
third  of  the  nineteenth  century,  before  steam  on 
sea  and  land  swept  space  aside,  it  was  possible  in 
isolation  for  some  industrial  community  to  gather 
strength,  as  in  islanded  England  or  in  early  or- 
ganized France,  and  this  development  gave 
strength  and  power  to  the  English  King’s  Bench 
writ  and  to  the  French  King’s  “ Parlement.” 

Apart,  China  had,  a century  ago,  a sound  in- 


PREFACE 


xix 


dustrial  system,  narrow  but  stable,  with  a popu- 
lation overcrowded  on  the  coast,  but  possessing 
in  the  interior  peace  and  comfort,  as  Abbe  Hue 
has  testified.  Alone,  this  development  might 
have  gone  on.  When  steam  brought  English  and 
American  competition,  China  would  have  reor- 
ganized its  industrial  system  if  it  had  had  courts 
and  a judicial  system  possessing  integrity  and  an 
efficient  government  to  enforce  judicial  decrees; 
but  competition  destroyed  its  industries,  and  the 
absence  of  the  foundation  of  all  economic  sys- 
tems, justice,  prevented  China  from  advancing. 
First,  in  the  south  of  China,  earliest  affected  by 
European  competition,  came  the  Tai  Ping  Re- 
bellion, and  the  new  European  arms  of  precision 
gave  the  central  tyranny  of  the  Manchu  a new 
power.  Later,  North  China  broke  out  in  the 
Boxer  revolt,  economic  in  origin.  For  fifteen 
years  past,  the  interior  has  been  aflame,  rising 
first  where  the  great  rivers  bring  closer  European 
trade.  China  is  to-day  a derelict,  a hulk  adrift 
on  the  ocean  of  history,  where  it  has  weathered 
so  many  storms,  its  industries,  two  centuries 
ago  giving  lessons  to  Europe,  to-day  deterio- 
rated or  destroyed. 

This  is  the  history  of  all  Asia  and  of  all  North 
Africa,  of  much  of  Latin  America.  So  long  as  the 


XX 


PREFACE 


Turkish  Sultan  and  the  Moslem  commonalty 
had  the  same  arms,  despotism  could  not  go  more 
than  so  far.  When  the  Turkish  army,  a century 
ago,  was  new-armed  and  organized  on  the  Euro- 
pean model,  naught  could  stay  the  despotism  of 
Constantinople.  The  rugs  of  Anatolia  and  the 
wares  of  Kutaiyeh,  ninety  years  ago  the  best 
faience  of  the  West,  have  fallen  from  old  stand- 
ards. So  with  the  solid  colors  of  Peking  wares, 
and  the  porcelains  of  the  interior.  Persia  in  the 
last  fifty  years  has  seen  the  art  of  four  centuries 
cease  as  all  its  great  caravan  roads  fell  into  dis- 
order and  the  caravans  carried  European  goods 
to  the  undoing  of  native  industries  unable  to 
develop  for  lack  of  courts. 

This  has  been  a world  movement.  The  inexo- 
rable principle  that  you  cannot  build  a sound  eco- 
nomic structure  unless  credit  and  contracts  are 
sustained  by  courts  that  can  be  trusted,  works 
as  pitilessly  as  the  attraction  of  gravitation  on 
the  bowing  wall  and  the  tottering  fence,  the 
arch  of  untempered  mortar  and  the  door  jambs 
whose  sill  is  heaved  by  frost.  Sixty  years  ago  I 
saw  the  process  beginning  in  Turkey,  first  on  the 
coast,  later  in  the  interior.  Thirty  years  ago  I 
saw  the  same  forces  at  work  in  Morocco,  in  the 
mediaeval  capital  of  Fez,  whose  old  Andalusian 


PREFACE  xxi 

potters  and  patterns  were  being  ruined  by  Ger- 
man crockery. 

Latin  America  has  faced  the  same  drastic 
pressure.  A century  ago  all  the  world,  when 
Canning  called  a new  world  into  being  to  redress 
the  balance  of  the  old,  looked  to  see  the  economic 
development  of  the  revolted  colonies  of  Spain 
and  Portugal.  Bad  as  Spanish  administration 
was  and  relentless  as  was  the  censorship  of 
the  Inquisition,  the  printing-presses  of  Mexico 
turned  out,  relative  to  the  mechanic  art  of  the 
day,  better  work  two  hundred  years  ago  than 
to-day.  It  is  the  older  pottery  of  Mexico  to 
which  one  turns  for  the  far-flung  influence  of 
the  faience  of  Spain  fashioned  out  of  the  light 
volcanic  clays  of  Mexico.  It  is  not  the  recent 
edifices  of  Mexico  our  architects  study  to  give 
us  what  we  call  “Mission”  architecture.  Let 
Courts  be  absent  and  justice  dubious,  and  the 
sure  end  of  the  investment  of  $1,000,000,000 
which  Mr.  Barron  sketches  was  predetermined. 
When  “Boston  people  had  great  hopes  of  traffic 
in  the  Mexican  Central  line  they  built  from  El 
Paso  to  connect  with  the  City  of  Mexico,”  they 
were  themselves  so  familiar  with  the  courts  of 
Massachusetts  that  they  looked  on  the  justice 
men  trust  as  a normal  natural  product  of  so- 


XXI 1 


PREFACE 


ciety.  They  forgot  that  rails  must  rest  on  more 
than  rock  ballast  to  be  safe  for  profits. 

Cuba,  under  the  Platt  Amendment,  is  secure 
and  produces,  year  after  year,  a sugar  crop  nearly 
treble  the  best  of  the  Spanish  past,  with  ris- 
ing wages  because  we  insisted  on  order,  courts 
that  enforced  contracts,  and  a sanitation  which 
excluded  pestilence.  Economic  prosperity,  rail- 
roads that  pay  dividends,  factories  whose  prod- 
ucts meet  competition,  and  a growing  popula- 
tion can  only  come  where  courts  are  justly  trusted 
and  enforce  contracts;  when  public  health  and  a 
low  death-rate  maintain  the  vigor  of  the  laborer, 
and  his  life,  his  property,  and  the  schooling  of  his 
children  are  protected  by  a sound  and  efficient  ad- 
ministration. Let  these  be  absent  and  rule  will 
become  a gamble  for  power  and  money,  men  will 
buy  concessions  first  and  protection  for  them 
later,  perennial  disease  will  sap  industry,  and  you 
can  neither  secure  capital  from  abroad  nor  pro- 
vide labor  at  home. 

Japan,  islanded  and  long  able  to  shut  out  for- 
eign competition,  first  by  a policy  of  general  ex- 
clusion and  later  by  adroit  internal  administra- 
tion, was  able  to  reorganize  its  industries  before 
they  were  sapped  and  destroyed.  Its  ruling  class 
created  a new  judicial  system  which  commanded 


PREFACE 


XXltl 


such  respect  that  exterritoriality  and  its  courts 
were  abolished  at  the  opening  of  this  century  and 
native  and  foreigner  trusted  to  the  same  justice. 
In  other  Asiatic  lands  special  consular  courts  give 
the  foreign  merchant  a standing  advantage  which 
destroys  native  credit  and  paralyzes  native  en- 
terprise. Japan  is  a signal  proof  of  the  way  an 
Asiatic  land,  if  it  be  for  a season  protected,  can 
reorganize  its  industry  and  create  stable  condi- 
tions out  of  which  a new  system  can  come,  safe- 
guarded and  fostered  by  public  order,  courts 
creating  confidence,  and  efficient  sanitation. 

It  is  no  answer  to  say  that  the  Japanese  have 
special  powers  and  a personal  aptitude.  Ask  any 
man  who  knows  the  Far  East  as  to  the  personal 
credit  of  Chinese  and  Japanese.  Compare  Per- 
sian and  Japanese  art  when  both  were  at  work 
under  similar  conditions  in  the  seventeenth  cen- 
tury. I have  known,  boy  and  man,  closely  and 
intimately,  a wide  range  of  human  beings.  I have 
had  at  my  table  and  been  honored  by  the  close 
personal  friendship  of  men  black,  yellow,  red, 
white,  and  many  shades  between.  The  Near  East 
I know  as  do  only  those  who  speak  its  tongues, 
have  known  it  in  childhood,  and  mature  years, 
read  its  literature,  thrill  to  the  genius  of  its  va- 
rious arts,  and  have  the  open  heart  and  mind  for 


XXIV 


PREFACE 


its  faiths.  At  bottom,  men  are  alike.  Human  be- 
ings make  Humanity.  Under  like  conditions,  all 
act  alike.  Give  any  land  and  any  race  a fair 
chance  and  it  will  be  as  others  and  not  otherwise. 

But  after  old  systems,  industrial  and  econo- 
mic, are  undermined  and  overthrown,  this  chance 
can  only  come  by  building  anew  under  protected 
conditions.  See  how  English  courts  are  bringing 
India  closer  and  closer  to  self-government.  Where 
would  Cuba  be  but  for  our  aid?  Give  Mexico 
protection  for  order,  courts,  contracts,  industries, 
and  sanitation  for  a brief  space,  — one,  two,  or 
three  decades,  and  what  is  this  span  in  the  life 
of  a nation?  — and  the  splendid  qualities  of  the 
Mexican  people  would  do  the  rest.  Keep  order, 
create  courts,  educate  a generation,  turn  out 
typhus  and  tropical  diseases  which  scourge  the 
Mexican  home  (some  of  the  worst  maladies  are 
not  tropical),  and  the  courage,  the  loyalty,  the 
patient  industry,  the  quick  teachableness  of  the 
Mexican  can  be  trusted  to  maintain  what  it  se- 
cures under  tutelage,  and  to  add  to  it. 

Mexico  is  to-day  like  the  great  oil  wells  of 
which  Mr.  Barron  gives  so  vivid  a picture,  a 
fathomless  resource  for  the  light  and  power  of  the 
world,  and  needing  only  the  mechanism  which 
will  enable  it  to  set  a thousand  keels  and  ten 


PREFACE  xxv 

thousand  wheels  in  motion  and  light  millions  of 
happy  homes. 

How  can  the  necessary  order,  effective  courts, 
and  national  sanitation  be  provided  for  such 
great  ends  of  justice? 

The  United  States  brought  these  things  to 
Cuba  and  see  the  result,  peace  and  prosperity 
without  annexation  and  with  complete  autono- 
mous independence  for  the  Cuban  people.  Give 
the  Mexican  people  the  same  chance,  the  same 
opportunity,  a like  period  in  which  new  institu- 
tions, new  courts,  new  security,  new  sanitation 
come  into  being,  and  Mexico  will  show  the  same 
marvel  of  abounding  progress. 

The  United  States  just  a half-century  ago 
saved  Mexico  from  the  foreign  invader.  To-day 
Mexico  must  be  saved  from  the  internal  de- 
stroyer. One  task  was  accomplished  without 
invasion.  The  other  may  be.  Accomplished  it 
must  be.  Moral  responsibilities  know  no  bound- 
ary lines. 

Talcott  Williams 

Columbia  University 

New  York  July  1,  1917 


CONTENTS 


I.  The  Contrast 1 

II.  American  Interests  no  Base  of  Disorder  15 

III.  Business  and  not  Politics  can  redeem 

Mexico 27 

IV.  Who  shall  help  the  Engulfed  People?  . 39 

V.  Why  No  Aid  for  Mexico? 52 

VI.  The  Financial  Benefits  of  Disorder  . . 60 

VII.  The  Law  of  Compensation  ....  67 

VIII.  The  “Effectivos”  in  Mexico  ....  77 

IX.  Oil  Expansion 86 

X.  Pioneer  Work  Finished 94 

XI.  Why  the  Pan-American  Company  controls 

Mexican  Petroleum 104 

XII.  Doheny  — Lord  of  Oil 120 


ILLUSTRATIONS 


A Petroleum  Camp  in  Mexico  . . . Frontispiece 

Clearing  Jungle  for  Petroleum  Camp  ...  20 

Christmas  Day  at  Ebano.  Unveiling  Statue  of 
Juarez 24 

Tiie  Gusher  Potrero  4,  before  being  capped  . 36 

Storage  Reservoir  at  Potrero  — 2,500,000  Bar- 
rels   48 

Some  of  the  55,000-Barrel  Storage  Tanks,  Mexi- 
can Eagle  Oil  Company 48 

View  of  Tuxpan,  showing  Storage  Tanks  and 
Steamer  loading  Cargo  of  Mexican  Oil  from 
Deep-Sea  Loading  Lines 58 

A Barbecue  with  Americans  waiting  on  the 
Mexicans 70 

Two  British  Destroyers  — - One  running  on  Coal, 
the  Other  on  Oil 88 

Peon  Houses  before  Oil  Development  began  96 

Residences  of  Peons 100 

Near  Tres  Hermanos 124 

Huasteca  Petroleum  Company  supplying  Natives 
with  Food  brought  by  its  Tankers  from  the 
United  States,  during  War  Times  in  Mexico  . 132 

Map  showing  Lands  of  Mexican  Petroleum 


Company At  end  of  book 


THE  MEXICAN  PROBLEM 


CHAPTER  I 

THE  CONTRAST 

Appeals  in  behalf  of  Mexico  have  been  before 
the  people  of  the  United  States  for  more  than 
one  generation. 

Fifty  years  ago  the  appeals  were  from  re- 
turned missionaries  collecting  money  to  help 
spread  truth  and  light  before  our  fellow  man 
and  brother  over  our  southern  border. 

Nearly  forty  years  ago  came  the  appeal  for 
railroads.  The  good  people  of  the  North,  and 
especially  of  New  England,  responded  with  mil- 
lions and  declared:  “We  think  the  investment 
will  be  profitable,  but  we  take  pleasure  in  the 
thought  that  the  railroads  will  be  the  best  mis- 
sionaries. They  will  open  opportunities  for  mu- 
tual and  profitable  development  in  trade,  com- 
merce, mining,  and  manufacturing.  There  is 
much  that  we  can  do  for  Mexico,  and  much 
that  she  can  do  for  us.” 

The  nickels  and  dimes  of  my  early  savings 
that  had  not  gone  to  the  Mexican  missionary  in 


2 


THE  MEXICAN  PROBLEM 


response  to  Bishop  Butler’s  heart-moving  ap- 
peals were  now  taken  from  the  savings  bank  and 
subscribed  for  bonds  of  the  Mexican  Central  and 
Sonora  Railways  — the  one  to  open  up  the  great 
tableland  of  Mexico  from  El  Paso  to  Mexico  City 
and  the  other  to  carry  the  Atchison  development 
of  the  Southwest  to  the  beautiful  mountain- 
locked  port  of  Guaymas  on  the  Gulf  of  California. 
Here  opened  vistas  for  New  England  capital  and 
California  enterprise  down  the  Pacific  Coast  and 
through  the  heart  of  Mexico. 

SOUTHERN  CALIFORNIA  AND  MEXICO 

In  conjunction  with  Thomas  Nickerson,  the 
great  pioneer  builder  of  the  Atchison  and  the  rail- 
roads of  Mexico,  I journeyed  to  California;  and  at 
San  Diego  listened  to  one  of  the  best  addresses 
I ever  heard,  and  from  a man  who  never  made 
addresses.  Thomas  Nickerson  told  the  Chamber 
of  Commerce  at  San  Diego  that  he  was  not  in 
agreement  with  the  Southern  and  Central  Pacific 
people  whom  he  had  visited  in  San  Francisco  and 
who  had  declared  that  there  was  nothing  in  San 
Diego  or  Southern  California  except  invalids, 
“ one-lungers,”  and  bees,  and  that  the  only 
prospective  traffic  from  the  harbor  of  San  Diego 
was  a few  boxes  of  honey  in  the  comb.  Nicker- 


SOUTHERN  CALIFORNIA  AND  MEXICO  3 


son  declared  his  faith  and  the  faith  of  the  people 
of  New  England  in  the  development  of  Southern 
California  and  closed  by  saying  that  he  was  sure 
of  one  thing:  that  if  the  road  did  not  pay,  the 
people  who  had  put  in  the  money  could  afford  to 
lose  it. 

There  was  no  such  doubt  regarding  the  rail- 
roads of  Mexico.  In  Mexico  were  mines  with 
long  records  of  production,  fertile  soils,  tropical 
fruits,  millions  of  people.  In  Southern  Califor- 
nia there  were  no  mines,  few  people,  and  only 
sunshine  and  honey  bees  as  a basis  for  American 
enterprise. 

Although  Thomas  Nickerson  was  well  along  in 
years,  we  took  to  the  saddle  and  rode  up  through 
Temecula  Canon  and  the  Temescal  Valley  over 
the  line  of  the  proposed  Southern  California  Rail- 
way and  on  to  the  irrigated  gardens  of  Riverside, 
with  not  a house  or  habitation  between  that 
town  and  the  seacoast,  although  sheep  grazed 
peacefully  in  the  broad  valley  of  Temescal. 

A few  days  later  I was  in  Sonora,  journeying 
toward  Guaymas.  We  made  “ Uncle  Thomas,” 
as  we  affectionately  called  him,  a pallet  of  straw 
in  the  stable  of  the  ranch  of  Jesus  Maria,  and 
then  outside,  before  we  said  good-night  to  the 
stars  and  rolled  up  back  to  back  in  our  blankets 


4 


THE  MEXICAN  PROBLEM 


on  buffalo  robes,  I interrogated  the  engineers, 
not  only  concerning  mines  and  mining  history, 
but  as  to  how  they  knew  the  volume  of  water  that 
might  one  day,  in  Southern  California,  seek  to 
pass  through  that  seventeen-mile  narrow  gorge 
known  as  the  Temecula  Canon.  They  explained 
in  detail  how  they  determined  the  watershed 
area  in  those  hills  and  the  probable  rainfall  and 
then  built  the  bridges  and  tracks  at  elevations 
in  the  valley  well  above  future  waters. 

DISASTER  AND  RECOVERY 

Not  long  after  our  little  party  reached  home 
the  rainy  season  began  in  Southern  California, 
and  the  beautiful  valley  where  the  sheep  had 
been  so  peacefully  grazing  was  a lake,  several 
feet  deep  and  twenty  miles  long;  out  of  which 
roared  through  the  Temecula  Canon  a river, 
twenty  and  forty  feet  deep,  vomiting  forth  ties, 
spikes,  rails,  and  bridges,  as  man’s  poison  to  be 
cast  forth  upon  the  plains  by  the  seacoast. 

The  California  Southern  Railroad  was  gone, 
but  the  energy  of  the  white  men  who  built  it  re- 
mained. More  rails  were  ordered,  a new  loca- 
tion, or  pass,  through  the  mountains  found,  and 
to-day  the  Southern  California  is  the  bright  gem 
of  the  great  Atchison  system. 


GREAT  EXPECTATIONS 


5 


In  Sonora  we  shot  blackbirds  and  jackrab- 
bits,  where  grasses  waved  high  as  cornfields  and 
the  hills  showed  mineral  values.  The  people  at 
Hermosillo  and  Guaymas  welcomed  us  as  open- 
ing for  them  and  their  country  the  opportunities 
of  a broader  civilization.  The  rails  were  already 
laid  for  forty  miles  from  Guaymas,  which  has  a 
harbor  more  beautiful  than  California’s  Golden 
Gate. 


GREAT  EXPECTATIONS 

A few  days  later  we  went  out  on  the  Mexican 
Central  from  El  Paso  to  the  end  of  the  track, 
which  was  just  then  starting  on  its  path  toward 
the  City  of  Mexico,  to  lift  this  great  land  of 
the  Aztecs  and  its  people  into  fellowship  and 
commercial  life  with  the  “Big  Brother”  of  the 
North.  The  future  of  Mexico  seemed  as  clear 
as  the  sunshine,  although  Southern  California 
seemed  a doubtful  proposition. 

Returning  to  Boston,  I published  as  follows, 
February  15,  1882,  thirty-five  years  ago:  — 

No  one  realizes  what  government,  or  the  ab- 
sence of  government,  can  do  for  a people  until 
he  sees  Mexico,  in  comparison  with  the  United 
States.  Arizona  and  the  Southwest,  upon  an 
almost  waterless  and  comparatively  barren  soil, 
are  prosperous  from  extensive  grazing  and  min- 


6 


THE  MEXICAN  PROBLEM 


ing  interests,  while  Sonora,  just  across  the  bor- 
der, far  richer  in  water  and  soil  and  mineral,  has 
slumbered  for  years,  devastated  by  incursions  of 
Indians  from  the  North,  and  then  rent  with  in- 
ternal political  dissensions,  yet  all  the  while  hop- 
ing for  the  morrow  to  bring  forth  peace  and  pros- 
perity. No  wonder  the  Mexicans  love  the  word 
mahana,  for  in  to-morrow  has  lain  their  hope  for 
years.  But  Sonora  and  Mexico  are  rapidly  pass- 
ing into  a new  day  whence  all  that  has  been  will 
be  as  yesterday,  and  to-morrow  will  be  bright 
with  promise. 

The  world  now  touches  the  sunshine  of 
Southern  California,  eating  its  sun-kissed 
oranges,  its  sun-dried  figs,  its  new  seedless  rai- 
sins, and  the  fruit  of  its  alligator  pear  trees, 
transplanted  from  Mexico.  Its  deep  valleys  are 
raising  the  finest  cotton;  its  motor  highways 
are  jewels  in  the  crown  of  a State  promoting  in- 
tercourse over  wide  reaches  betwixt  its  peoples. 

HONEY  AND  THISTLES 

The  honey  of  human  bee  life  is  in  California. 
In  Mexico  are  yet  the  thistle,  the  nettle,  and 
the  hornet,  the  prickly  cactus,  sheltering  the 
serpent,  the  poisonous  herb  shading  the  centi- 
pede — and  the  political  centipede. 

I was  surprised  a few  years  ago  to  be  notified 
that  the  Mexican  Central  forty-year  bonds,  to 


RESTRICTED  BUSINESS 


7 


which  I had  so  early  subscribed,  were  coining 
due.  They  had  been  scaled  down  from  seven 
per  cent  interest  to  five  per  cent,  then  to  a lower 
rate,  and  now  whatever  has  succeeded  them  is  a 
wanderer  in  Europe  with  no  return,  and  the 
property  they  are  supposed  to  represent  is  slid- 
ing backward.  Its  rolling-stock  goes  into  the 
mire,  and  bandits  tear  up  the  rails,  shooting  the 
soldiers  of  Carranza  and  looting  and  shooting 
the  native  and  foreign  passengers. 

Scarcely  a day  passes  that  reports  do  not 
reach  my  desk  from  personal  and  sometimes 
confidential  sources,  of  banditry,  looting,  and 
shooting,  concerning  which  not  a line  can  be 
found  in  the  general  press  cf  the  day.  The  al- 
most daily  occurrences  in  Mexico  would  be  sen- 
sational and  call  for  glaring  headlines  if  the 
happenings  were  north  of  the  Rio  Grande;  but 
nobody  will  buy  a paper  to  read  about  lawless- 
ness in  Mexico. 

RESTRICTED  BUSINESS 

It  is  generally  known  that  the  copper  mines 
and  smelters  are  only  partially  operating  in  the 
north,  that  travel  is  nowhere  safe  in  that  country, 
and  that  only  in  the  oil  fields  around  Tampico 
and  south  is  there  any  real  business  progress. 


8 


THE  MEXICAN  PROBLEM 


Even  at  Tampico  every  oil  refinery  has  this 
spring  been  closed  down  for  a greater  or  less 
number  of  days,  interfering  with  oil  supplies 
now  so  necessary  in  the  world’s  progress  through 
war. 

It  is  difficult  to  place  the  blame  as  between 
I.W.W.  agitators  drawing  pay  from  German 
agents  and  petty  Mexico  authorities,  some  of 
whom  do  and  some  of  whom  do  not  recognize 
any  national  authority. 

Washington  and  Mexico  City  do  not  want 
these  disturbances  reported;  nor  do  the  business 
interests  dependent  upon  American  credit,  and 
whatever  protection  may  be  afforded  Mexico,  in- 
vite publicity  concerning  Mexican  disturbances. 

Ask  any  director  or  official  of  a foreign  enter- 
prise in  Mexico  concerning  the  situation  and  he 
will  give  evidence  only  behind  locked  doors  or 
with  the  understanding  that  his  statements  are 
confidential  and  his  company  is  not  to  be  men- 
tioned. He  knows  that  he  is  managing  the  prop- 
erty of  others  in  a country  where  there  is  to-day 
no  constitution  and  no  law;  but  he  dare  not  say 
so  publicly,  for  there  are  several  alleged  consti- 
tutions in  Mexico,  many  alleged  laws,  and  very 
many  decrees,  and  there  is  to-day  the  power 
to  suspend  every  constitution,  law  and  decree. 


A SIMPLE  PROPOSITION 


9 


Taxation  has  become  only  a matter  of  pressure 
to  get  something  from  anybody  who  has  it. 

A SIMPLE  PROPOSITION 

Yet,  aside  from  the  question  of  order  and  jus- 
tice, Mexico  is  a simple  proposition.  The  na- 
tional expenses  are  less  than  $100,000,000  Amer- 
ican gold,  yet  a little  more  than  half  must  go  to 
the  national  defense.  The  revenues  have  been 
but  seventy -five  per  cent  of  the  expenses,  and 
because  it  never  had  any  credit  it  never  piled  up 
any  outside  debt.  Diaz  not  only  built  up  Mex- 
ican foreign  trade  from  $15,000,000  American 
gold  to  $250,000,000,  but  he  built  up  the  na- 
tional treasury  from  emptiness  to  $30,000,000 
American  gold. 

More  than  thirty  years  ago  John  Bigelow 
warned  us  that,  notwithstanding  the  apparent 
peace  and  prosperity  in  Mexico  under  Diaz,  it 
was  a republic  only  in  name,  a slumbering  vol- 
cano with  a government  by  gunpowder  only.  At 
that  time  I refuted  many  of  Mr.  Bigelow’s  er- 
rors in  his  citation  of  facts,  but  history  proved 
his  main  indictment.  The  people  of  Mexico  have 
never  had  a chance,  and  the  moment  Diaz  at- 
tempted to  broaden  the  governing  base  in  Mexico 
he  was  overthrown.  The  people  have  ever  since 


10 


THE  MEXICAN  PROBLEM 


been  ground  between  political  and  social  theo- 
rists both  in  the  United  States  and  their  own 
country. 

There  are  seventeen  million  people  in  Mexico 
— ten  million  pure  Aztecs,  five  million  of  par- 
tially Spanish  origin,  and  two  million  pure  Span- 
ish and  other  foreigners.  Where  formerly  it  was 
estimated  there  were  fifty  thousand  Americans 
there  are  not  now  five  thousand. 

The  fact  that  the  Spanish  invader  married  the 
Aztec  woman  is  not  the  curse  of  Mexico.  The 
curse  of  Mexico  is  the  faith  that  might  makes 
right.  Every  schoolboy  has  heard  the  phrase 
“Concpiest  of  Mexico.”  The  idea  of  conquests, 
nationally  and  individually,  is  so  strongly  rooted 
in  the  world  that  Europe  is  now  bathed  in  blood 
to  uproot  it. 


THE  RULE  OF  MIGHT 

When  Dr.  Dernberg,  formerly  Colonial  Min- 
ister in  Germany,  was  in  New  York  after  the 
breaking-out  of  the  Great  War,  he  tried  to  con- 
vince me  of  the  injustice  of  denying  to  Germany 
the  right  of  conquest  in  foreign  parts.  He  said: 
“ What  did  England  do  a hundred  years  ago? 
What  have  they  all  done?  Because  Germany 
comes  late  into  the  family  of  nations,  are  we  to 


GOVERNMENT  BY  JUSTICE 


11 


be  denied  our  part  in  conquering  the  earth,  in  the 
acquisition  of  new  territory,  in  colonial  empire?” 
The  idea  was  so  barbaric  to  my  freeborn  Amer- 
ican blood  that  I could  only  laugh  at  Dr.  Dern- 
berg  and  refer  him  to  the  dark  ages.  Yet  the  only 
army  in  Europe  that  has  ninety-nine  per  cent  of 
its  soldiers  able  to  read  and  write  supports  the 
right  of  conquest  and  territorial  expansion.  Have 
not  Paris  and  London  within  three  years  been 
promised  as  compensation  to  a fighting  people, 
that  they  might  possess  them  or  hold  for  ransom? 
What  is  the  difference  when  Villa  promises  loot 
as  compensation  to  those  who  will  attack  under 
his  leadership?  Sound  government  is  by  char- 
acter and  not  by  intellect.  The  redemption  of 
Mexico  can  never  be  accomplished  by  conquest 
or  loot. 


GOVERNMENT  BY  JUSTICE 

India  is  taxing  herself  and  fighting  for  Euro- 
pean justice  because  this  alone  has  given  her 
security  where  before  in  a hundred  years  a hun- 
dred different  dynasties  rose  up  and  attempt- 
ed rule  by  might.  That  country  was  redeemed 
only  when  government  by  justice  came  in. 

It  is  said  that  between  1821  and  1868  more 
than  fifty  rulers  attempted  the  government  of 


12 


THE  MEXICAN  PROBLEM 


Mexico.  Mexico  is  too  large  a territory  to  be 
bandied  by  legislative  enactment  from  one  city. 
Diaz  himself  never  really  ruled  the  whole  of  it. 
Mexico  is  largely  composed  of  territories  mis- 
named states.  In  these  distant  territories,  of  late, 
especially  in  the  north,  revolutions  start  and  get 
under  way  before  they  can  be  reached  or  dealt 
with  by  the  central  authorities. 

A just  and  lawful  government  should  be  es- 
tablished in  the  heart  of  Mexico  With  insured 
safe  connection  with  the  seacoast.  From  this, 
groups  of  states  can  be  knitted  in  and  distant 
parts  should  be  treated  as  Mexican  territory 
until  its  people  can  be  educated  and  trusted  with 
local  self-government  and  show  capacity  to  deal 
with  the  larger  problems  of  nationality. 

THE  MEXICAN  CHARACTER 

At  the  present  time  the  larger  part  of  the  good 
people  of  Mexico  are  children  who  want  to  be  in 
debt  and  at  the  same  time  care-free.  They  want 
to  work  laughing.  If  they  cannot  laugh  as  they 
work,  fighting  is  the  next  best  thing.  They  have 
no  other  understanding  of  a revolution  than  that 
it  is  a sporty  lark.  They  are  exactly  in  the  stage 
of  the  American  country  boy  who  on  attending 
a new  school  must  first  find  out  who  among  the 


DEBT  AND  CITIZENSHIP 


13 


pupils  can  “lick  the  teacher.”  If  the  teacher  is 
the  stronger  — sometimes  by  moral  force  and 
sometimes  by  brute  force  - — there  is  order  and 
discipline.  But  if  the  teacher  enters  a con- 
test and  is  downed,  he  is  no  longer  head  of  that 
school  and,  if  he  is  to  remain,  some  “ big  boy  ” 
must  keep  law  and  order  for  him. 

On  many  a hacienda  in  Mexico,  and  over  many 
years,  a skirmish,  even  with  pistols,  between  the 
manager  and  his  peon  workers  was  regarded  as 
a proper  lark.  If  the  manager  got  the  better  of  it, 
the  belligerents  went  peacefully  back  to  work 
and  everybody  was  happy  because  the  boss  had 
sustained  his  position. 

Mexico  is  not  a difficult  proposition  when  once 
you  understand  the  Mexican  character.  He  is 
the  same  childlike,  dependent,  trusting  fellow 
whether  at  work,  play,  or  revolution.  He  is 
simply  in  need  of  a strong  helping  hand. 

DEBT  AND  CITIZENSHIP 

The  Mexican  peon  is  not  thirsting  for  land  or 
rule.  There  never  yet  were  twenty  thousand 
votes  cast  in  Mexico  for  a president.  The  ballot 
will  not  redeem  the  Mexican  from  the  peonage 
system  in  which  alone  he  has  confidence.  Sin- 
gular as  it  may  appear,  his  independence  and 


14 


THE  MEXICAN  PROBLEM 


his  self-respect  he  finds  in  this  system.  If  you 
try  to  give  him  financial  independence,  he  is 
fearful  and  rebellious.  He  is  afraid  that  you  are 
going  to  discharge  him;  that  he  will  lose  his  job 
without  being  transferred  to  another. 

In  brief  a Mexican  peon  in  agriculture,  or  on  a 
hacienda,  is  a self-sold  slave.  He  will  not  accu- 
mulate and  spend  his  money.  He  must  borrow 
of  his  employer  and  spend;  and  when  his  money 
is  gone  he  is  contented  and  happy  to  work  under 
debt.  But  if  you  deny  him  credit  or  try  to  get 
him  out  from  under  the  debt  system,  he  becomes 
suspicious,  will  not  work,  and  loses  his  own  self- 
respect;  you  have  not  trusted  him,  you  have 
no  confidence  in  him;  you  are  not  his  real 
friend,  and  he  would  like  to  be  transferred  with 
his  “account”  to  some  other  hacienda  or  em- 
ployer where  his  credit  will  be  unquestioned. 

While  the  peonage  system  may  be  the  safety 
of  agricultural  Mexico,  it  can  never  produce  in- 
dependence, citizenship,  and  self-government. 

The  redemption  of  Mexico  must  be  from  the 
invasion  of  business,  forcing  upon  the  natives  — 
the  good  people  of  Mexico  — technical  train- 
ing, higher  wages,  bank  accounts,  financial  in- 
dependence, and  the  rights  of  citizenship  and 
accumulation. 


CHAPTER  II 


AMERICAN  INTERESTS  NO  BASE  OF  DISORDER 

The  Mexican  problem  can  be  studied  better  at 
Tampico  than  elsewhere  in  Mexico.  Here  the 
civilization  and  business  forces  of  Europe  and 
America  have  opened  the  jungle  and  the  prairie, 
tapped  the  greatest  oil  basin  in  the  world,  har- 
nessed it,  piped  it  to  the  Gulf  coast,  and  here 
light  and  enlightenment,  work  and  wages,  invite 
human  development.  Here  is  the  American 
boom  town  of  Mexico,  grown  to  fifty  thousand 
population,  with  asphalt-paved  streets,  business 
blocks,  markets,  and  parks. 

Here  in  turn  the  warring  factions  of  Mexico 
fight  for  the  privilege  of  protecting  and  taxing 
the  developing  properties  about  Tampico.  Here 
the  new  order  meets  the  old.  The  native  Mexican, 
more  than  two-thirds  the  population  of  the  coun- 
try, gladly  accepts  the  extended  helping  hand. 

The  Anglo-Saxon,  the  European  and  the 
American,  are  welcome  throughout  Mexico. 
“Gringo”  is  only  a border  term. 

What,  then,  is  the  Mexican  problem? 


16 


THE  MEXICAN  PROBLEM 


It  is  the  problem  of  one  civilization  and  one 
order,  one  rule  and  procedure,  in  contact  with 
another  civilization,  another  order,  procedure 
and  morality. 


A WORLD  PROBLEM 

This  is  the  problem  belting  the  world.  It  is 
the  problem  of  China,  it  is  the  problem  in 
Egypt,  it  is  the  whole  of  the  southern-eastern 
question.  It  is  the  issue  that  blazes  in  northern 
Europe. 

Here  the  issue  is  complicated  because  the  on- 
coming order  finds  not  only  one  but  two  civiliza- 
tions already  in  the  field  and  more  or  less  in  con- 
flict for  four  hundred  years. 

Governments  in  Europe  are  breaking  up. 
Governments  in  Mexico  are  one  after  another 
breaking  down;  but  the  breakdown  in  Mexico 
has  no  more  relation  in  its  causes  to  the  United 
States  than  has  the  European  war,  as  the  facts 
when  ultimately  presented  before  the  American 
people  must  clearly  demonstrate. 

But  it  was  not  with  any  purpose  to  theorize  on 
the  Mexican  problem  that  the  writer  took  a trip 
across  the  country  and  the  Gulf  to  Tampico  and 
studied  the  resources  of  Mexico  in  the  Tampico- 
Tuxpan  oil  field  to  get  the  facts  of  the  existing 


THE  AMERICAN  PIONEER 


17 


situation  and  note  the  factors  springing  there- 
from related  to  American  investments. 

Tampico  has  a broader  meaning  in  the  Ameri- 
can investment  field  than  is  yet  generally  real- 
ized. The  development  of  the  gold  fields  of  South 
Africa  has  been  important,  not  because  of  the 
South  African  war  costing  England  $1,200,000,- 
000,  but  because  the  output  of  South  African 
gold  affected  the  civilization  and  the  economic 
and  social  order  of  the  world. 

Vera  Cruz,  Mexico  City,  and  the  west  coast  of 
Mexico  are  to-day  as  Mexican  as  ever  — both  in 
order  and  disorder.  But  Tampico  and  Tuxpan 
are  international  and  are  basic  in  the  economic 
and  social  progress  of  both  Europe  and  America, 
and  possibly  of  Asia. 

Here  is  the  British  naval  oil  base.  Here,  before 
the  war,  were  the  German  experts  studying  the 
future  relations  of  German  commerce  to  the  oil 
supply  of  the  world,  which  later  may  center  in 
Mexico. 


THE  AMERICAN  PIONEER 

American  pioneers,  however,  were  first  in  the 
field  and  American  business  talent  and  American 
capital  have  maintained  leadership  without  gov- 
ernment invitation,  support  or  even  recognition. 


18 


THE  MEXICAN  PROBLEM 


It  is  a popular  misconception  in  the  United 
States  that  the  people  of  Mexico  have  been,  are, 
or  are  about  to  be  exploited  in  the  interest  of  the 
Standard  Oil  refineries,  the  Guggenheim  smelters, 
or  the  Hearst  ranches.  Nothing  could  be  further 
from  the  facts  as  related  to  the  present  situation, 
although  both  in  Texas  and  Mexico,  Standard 
Oil  interests  attempted  years  ago  to  arrest  the  oil 
development. 

The  wealth  of  the  world  is  planetary  wealth 
until  it  is  lifted  by  human  discovery,  human 
forces,  and  human  hands  into  human  uses.  The 
agricultural  wealth  of  the  world  giving  food  to 
man  is  from  the  sun  through  the  soil  by  labor. 
The  mineral  and  oil  wealth  of  the  world  is 
by  human  discovery,  engineering,  machinery, 
finance,  and  complex  forms  of  human  labor.  Al- 
most universally  have  the  nations  of  the  earth 
recognized  right  by  discovery  in  underground 
wealth,  and  thus  invited  its  discovery  and  de- 
velopment. 

Under  the  administration  of  President  Diaz 
Mexico  was  opened  to  the  outside  world,  which 
was  invited  to  pour  in  its  talent,  money,  and  skill 
to  lift  to  the  surface  the  undeveloped  resources  of 
the  country,  teach  the  unskilled  labor  of  the  land, 
and  put  Mexico,  its  people  and  its  resources, 


THE  AMERICAN  PIONEER  19 

in  the  way  of  modern  development  and  civili- 
zation. 

What  are  now  the  oil  fields  of  Mexico  were 
formerly  the  “ bad  lands  ” of  the  jungle  and  the 
plain.  The  black  asphalt  oozes  softened  the  soil 
and  enmeshed  and  swallowed  up  cattle,  horses, 
and  wild  animals.  They  were  in  1900,  as  they 
had  been  for  nineteen  hundred  years,  worse  than 
valueless. 

Edward  L.  Doheny,  American  engineer-pros- 
pector, miner,  and  pioneer  developer  in  the  oil 
fields  of  Los  Angeles,  California,  was  more  than 
millionaire,  and  so  also  was  his  partner  Can- 
field,  when  they  entered  Mexico  in  1900  to 
prospect  for  petroleum.  They  were  not  freeboot- 
ers, seeking  conquest  or  the  exploitation  of 
people,  laws,  or  government.  They  were  looking 
to  do  in  Mexico  what  they  had  done  in  Califor- 
nia and  with  their  own  fortunes  lift  values  of  this 
old  planet  to  the  surface,  under  Mexican  laws, 
treaties,  and  customs  and  with  the  aid  of  Mexican 
labor.  Diaz  and  Mexico  had  invited  outside  tal- 
ent and  money;  Boston  money  had  built  the 
railroad  from  Arizona  to  the  port  of  Guaymas  on 
the  Gulf  of  California  and  from  El  Paso  to  the 
City  of  Mexico,  with  a branch  to  Tampico. 

Into  the  jungle  from  Tampico  to  Tuxpan 


20 


THE  MEXICAN  PROBLEM 


went  Doheny  and  Canfield  by  foot  and  on  horse- 
back. They  located  the  oil  seepages.  They 
sought  out  the  owners  of  the  lands.  First  they 
bought  450,000  acres  thirty-five  miles  west  of 
Tampico  and  later  170,000  acres  in  various  tracts 
south  toward  Tuxpan.  They  paid  from  sixty 
cents  per  acre  upward  and  astonished  the  Mexi- 
can people  by  the  prices  paid  for  such  unproduc- 
tive lands.  They  were  advised  against  such  large 
prices  by  the  Mexican  lawyers,  landowners,  and 
statesmen. 

But  the  Americans  retorted  that  the  price  was 
immaterial  if  they  found  what  they  were  after; 
they  would  not  hesitate  or  haggle.  The  Mexicans 
named  their  own  terms,  took  the  cash  and  de- 
livered title  deeds  running  back  through  gener- 
ations, some  titles  making  a heavy  volume. 

The  Americans  cleared  the  jungle  and  made  it 
a ranch.  They  built  blacksmith  shops,  ware- 
houses, water  lines,  and  hospitals.  They  bored 
for  oil,  developed  the  Mexican  Petroleum  Com- 
pany, and  brought  forth  the  biggest  oil  gush- 
ers in  the  world.  Pipe  lines  and  railways  pre- 
ceded and  followed  the  gushers.  British,  Dutch, 
Waters-Pierce,  and  some  Standard  Oil  and 
Southern  Pacific  interests  came  in,  but  the 
American  interests  stand  at  the  head. 


CLEARING  JUNGLE  FOR  PETROLEUM  CAMl’ 


NO  DISPUTE  WITH  GOVERNMENT  21 


NO  DISPUTE  WITH  THE  GOVERNMENT 

Nowhere  have  these  interests  disputed  with 
the  government,  or  refused  their  due  taxes  or  co- 
operation with  the  local  and  national  authorities. 
The  only  complaint  against  them  was  that  they 
raised  wages  from  less  than  twenty  cents  a day 
to  a minimum  of  one  dollar  a day  and  made 
native  Mexicans  into  blacksmiths,  carpenters, 
shipbuilders,  and  engineers  at  three  dollars  and 
fifty  cents  a day  in  gold. 

It  has  been  a new  economic  era.  It  has  been  a 
development.  It  has  not  been  a conquest  or  an 
exploitation  either  of  peoples  or  of  governments, 
and  the  same  may  be  said  of  all  the  other  inter- 
ests, British  and  American,  in  mining  and  in 
agriculture,  in  Mexico. 

The  fighting  in  Mexico  has  not  been  with  or 
concerning  American  or  foreign  interests.  The 
fighting  has  been  between  local  factions,  leading 
families,  political  parties,  the  ins  and  the  outs. 

The  strife  has  been  for  the  possession  of  the 
citadel  and  the  reins  of  government  at  Mexico 
City.  There  has  been  danger  to  the  American 
interests  only  by  reason  of  their  location  at  times 
between  the  conflicting  forces,  but  neither  the 
American  nor  the  foreign  interests  have  so  much 


22 


THE  MEXICAN  PROBLEM 


as  possessed  arms  for  their  own  defense.  No 
guns  are  allowed  on  any  of  these  oil  properties 
nor  are  they  desired.  Their  possession  would  be 
a menace,  because  they  would  be  desired  and 
fought  for  by  the  politically  contending  forces 
and  the  roving  bands  that  at  times  overrun 
Mexico  from  north  to  south  and  east  to  west. 

TAMPICO  HARBOR 

When  a generation  ago  the  Boston  people 
ploughed  the  railroad  line  from  Atchison  to  Santa 
Fe  and  across  the  great  American  desert  into 
California,  they  had  great  hopes  of  traffic  from 
the  Mexican  Central  line  they  built  from  El 
Paso  to  connect  with  the  City  of  Mexico,  a thou- 
sand miles  distant.  They  believed  it  would  be  a 
great  feeder  to  the  Atchison. 

In  this  they  were  disappointed,  but  they  still 
had  the  courage  to  build  a branch  to  Tampico, 
hoping  therefrom  to  make  a new  port  for  the  de- 
velopment of  the  interior  of  Mexico.  They  had 
no  thought  of  oil  and  no  other  thought  than  the 
wealth  of  the  great  high  plateau  in  the  center  of 
Mexico. 

For  years  the  Atchison  folders  printed  the 
Mexican  lines  almost  as  their  own.  To-day  on 
the  Atchison  folders  connections  north  even  into 


TAMPICO  HARBOR 


23 


Canada  may  be  traced,  but  Mexico  is  a foreign 
country  upon  which  the  railroads  need  not  waste 
paper  in  maps  or  time-tables.  A thumb-nail 
corner  in  the  Santa  Fe  map  shows  Mexico,  and 
on  it  from  Mexico  City  to  the  Rio  Grande  on  the 
coast  is  a wilderness  broken  only  by  the  harbor 
of  Tampico. 

To  all  American  lines  meeting  at  El  Paso  the 
business  in  and  out  of  Mexico  has  been  for  more 
than  thirty  years  a disappointment. 

It  is  now  clear  that  the  greatest  development 
in  Mexico  may  take  place  from  the  coast  and 
through  her  oil  wealth.  From  the  Rio  Grande  to 
Tampico  the  Gulf  coast  of  Mexico  is  largely  an 
unpenetrated  jungle,  rich  in  natural  resources 
and  capable  of  maintaining  a population  of  many 
millions. 

Tampico  harbor  is  simply  the  mouth  of  the 
Panuco  River  and  the  city  is  nine  kilometers  from 
the  jetties,  which  defend  the  river  mouth  from 
the  lashings  of  the  Gulf  waves.  Tampico  is  ca- 
pable of  indefinite  development  as  a port.  It  has 
a large  water  basin  to  the  south  and  another  to 
the  northwest,  while  from  near  the  mouth  of  the 
river  runs  a government  canal  almost  due  south, 
defended  from  the  Gulf  by  a narrow  strip  of  land. 
This  Chijol  Canal  enters  the  great  lagoon  of 


24 


THE  MEXICAN  PROBLEM 


Tamiahua,  which  is  continued  by  another  water- 
way near  the  coast  almost  to  Tuxpan.  There- 
fore, for  almost  the  entire  one  hundred  miles 
between  Tampico  and  Tuxpan  there  is  inland 
water  transportation  for  barges  and  shallow 
steamers  just  inside  the  coast  line. 

Between  the  Chijol  Canal  and  the  Panuco 
River  are  the  termini  of  the  Mexican  Petroleum 
pipe  lines  “tank  farm”  and  Tankville,  with 
altogether  one  hundred  and  three  tanks,  each 
filled  with  55,000  barrels  of  oil.  There  is  also  a 
storage  basin  carrying  more  than  800,000  barrels 
of  oil.  Here  are  the  machine  shops,  carpenter 
shops,  and  shipbuilding  plant,  piers  that  will  au- 
tomatically load  the  largest  steamers  in  a few 
hours,  and  a topping  plant  to  take  the  gasolene  or 
distillate  from  the  crude  oil.  About  ten  per  cent 
of  the  oil  is  gasolene  and  its  removal  does  not 
impair  the  fuel  qualities  of  the  ninety  per  cent 
remaining. 

Here  also  on  the  east  side  of  the  river  are  the 
Standard  Oil  and  Royal  Dutch  works  and  a re- 
finery and  topping  plant  of  the  Mexican  Eagle 
Company.  On  the  other  side  of  the  river  are  the 
Pierce  Oil  refinery,  the  railroad  terminal,  and  a 
magnificent  government  wharf. 

The  mouth  of  the  river  is  being  dredged  by  co- 


CHRISTMAS  DAY  AT  EBANO.  UNVEILING  STATUE  OF  JUAREZ 


PICTURESQUE  EBANO 


25 


operation  between  the  Carranza  government  in 
control  at  Tampico  and  the  oil  interests,  more 
than  a dozen  American  companies  cooperating 
to  advance  the  money,  the  same  to  be  repaid 
from  taxes  on  a part  of  the  increase  of  their  busi- 
ness. Under  this  arrangement  the  Mexican  Eagle 
Company,  Lord  Cowdray’s  company,  advances 
twenty-five  per  cent  and  the  Mexican  Petroleum 
Company  thirty-three  and  one-third  per  cent. 

PICTURESQUE  EBANO 

The  first  oil  developments  began  at  Ebano, 
thirty-five  miles  west  on  the  railroad  from  Tam- 
pico. Here  the  Mexican  Petroleum  Company  has 
now  450,000  acres  bounded  on  the  north  by  the 
Tamesin  River,  and  reaching  almost  down  to  the 
Panuco  River,  the  general  direction  of  which  is 
parallel  with  the  Tamesin  River.  Here  is  the 
heaviest  oil,  while  as  one  goes  south  the  oil  is 
lighter  and  increases  in  commercial  value. 

Ebano  is  one  of  the  most  picturesque  towns 
in  Mexico,  an  American  creation,  of  Mexican 
architecture,  covering  a beautiful  mound  rising 
nearly  two  hundred  feet  above  the  plain,  now  a 
fertile  ranch,  the  whole  reminding  one  of  the 
beautiful  Italian  villages  set  on  a hill;  but 
ranch  and  hill  were  seventeen  years  ago  a jungle 


26 


THE  MEXICAN  PROBLEM 


thicket  with  no  life  but  that  of  the  panther,  the 
serpent,  the  parrot,  and  all  the  other  animal  and 
bird  life  of  the  jungle. 

From  this  point  the  National  Railways  of 
Mexico  are  furnished  their  fuel  oil.  With  the 
railroads  working  at  their  capacity  in  a settled 
country  they  would  be  consuming  twelve  thou- 
sand barrels  a day,  but  at  present  less  than  six 
thousand  barrels  is  taken  and  the  proceeds  are 
credited  on  the  company’s  tax  bill.  The  tax  is 
about  five  cents  per  barrel  for  exported  oil. 

Until  Mexico  has  settled  down,  it  is  not  worth 
while  to  dwell  upon  the  oil  or  agricultural  wealth 
or  the  few  millions  here  first  invested,  for  the 
wells  farther  south  are  abundantly  sufficient  to 
fill  four  times  the  present  pipe  lines  and  four 
times  the  available  ocean  tonnage. 


CHAPTER  III 


BUSINESS  AND  NOT  POLITICS  CAN  REDEEM 
MEXICO 

The  United  States  can  never  take  its  proper  atti- 
tude in  cooperative  democracy  toward  its  sister 
republic  until  two  popular,  yet  absolutely  false, 
impressions  of  Mexico  are  removed.  These  popu- 
lar fallacies  are:  — 

First,  that  the  natural  wealth  of  Mexico  has 
furnished  a base  for  contending  business  inter- 
ests from  the  United  States  to  promote  Mexican 
quarrels. 

Second,  that  the  land  question  is  at  the  bottom 
of  the  Mexican  troubles. 

The  writer  must  frankly  confess  that  for  many 
years  he  believed  these  popular  superstitions,  and 
only  his  recent  trip  into  Mexico  dissipated  them. 

The  history  of  the  Standard  Oil  Company  as 
popularly  presented  has  been  that  of  a record  of 
oil  monopoly  checked  intermittently  by  courts 
and  legislatures,  — a monopoly  overriding  indi- 
vidual and  popular  rights  and  promoting  peace 
or  war  for  financial  ends. 


28 


THE  MEXICAN  PROBLEM 


Suspicions  concerning  the  Standard  Oil  Com- 
pany in  Mexico  have  been  prevalent  on  both 
sides  of  the  Atlantic. 

Many  times  the  representatives  of  American 
oil  interests  at  Mexico  have  been  interrogated  at 
Washington  as  to  their  relations  with  the  Stand- 
ard Oil  Company,  and  each  time  the  response  has 
been  emphatic  that  the  Standard  Oil  Company 
was  neither  openly  nor  secretly  promoting  the  oil 
development  in  Mexico  or  behind  any  important 
independent  producing  companies. 

THE  POSITION  OF  THE  STANDARD  OIL  COMPANY 

The  fact  is  that  the  Standard  Oil  Company 
has  aimed  at  a monopoly  of  markets,  a monopoly 
of  transportation,  and  a monopoly  of  refining.  It 
has  always  avoided  ownership  in  the  producing 
field.  The  late  H.  H.  Rogers  used  to  declare  that 
the  Standard  Oil  Company  wanted  no  more  than 
an  eightv-five  per  cent  monopoly  in  oil ; but  that 
its  fifteen  per  cent  interest  in  the  production 
was  more  than  it  desired  in  that  line.  The 
Standard  Oil  Company  has  prospected  or  mined 
for  oil  only  where  others  could  not  be  induced 
to  take  the  risk.  The  hazard  of  mining  the 
Standard  Oil  Company  has  always  endeavored 
to  avoid. 


STANDARD  OIL  COMPANY 


29 


The  Amalgamated  Copper  Company  was  a 
failure  under  Mr.  Rogers  because  he  was  not  a 
miner  and  hesitated  to  take  a miner’s  risk  in 
opening  the  Butte  copper  district  at  depth. 

The  men  who  opened  the  Mexican  oil  terri- 
tory were  prospectors  and  miners  and  never 
sought  the  manufacturing  or  distribution  ends 
of  the  business.  Even  to-day  E.  L.  Doheny  both 
in  California  and  in  Mexico  declares  he  prefers 
the  profits  of  production  on  a large  scale  to  the 
details  of  manufacturing  or  the  business  of  re- 
tailing, which  he  regards  as  distinct  fields  from 
oil  production. 

The  Standard  Oil  people  are  buyers  of  oil  at 
Tampico  and  are  building  a refining  plant  there 
to  become  larger  buyers  of  oil,  and  they  have 
some  producing  interests  south  of  Tuxpan.  The 
Pierce  Oil  Company  also  has  a refinery  at  Tam- 
pico and  the  British,  or  Lord  Cowdray,  interests 
ship  from  both  Tampico  and  Tuxpan  and  re- 
fine at  Tampico  and  Tehuantepec. 

The  Mexican  Petroleum  Company  is  the  larg- 
est producing  interest  in  Mexico,  with  a present 
production  of  fifty-five  thousand  barrels  per  day. 
The  Cowdray  interests  are  second  with  about 
thirty  thousand  barrels  a day  on  present  re- 
stricted shipping  facilities.  Other  interests  rep- 


30 


THE  MEXICAN  PROBLEM 


resented  at  Tampico  are  the  Pierce  Oil  Company 
and  the  Royal  Dutch  or  Shell  interests  and 
the  Standard  Oil  Company  of  New  Jersey.  The 
outlook  is  that  the  Shell  interests  will  soon  be 
the  third  largest  producers.  But  the  major  in- 
terests of  the  Pierce  Oil  Company  and  the  Stand- 
ard Oil  companies  here  are  in  the  refining  of  oil. 

A WORLD  MAGNET  IN  MEXICO 

It  is  because  of  these  interests,  American  and 
European,  in  the  Tampico  field,  both  as  pro- 
ducers and  refiners,  and  because  such  evidences 
of  underground  wealth  can  command  the  capital 
of  both  Europe  and  America  and  because  petro- 
leum fuel  is  working  revolutions  on  both  land 
and  sea,  that  the  development,  the  regeneration, 
and  the  hope  of  Mexico  and  of  the  Mexican 
people  must  have  their  base  at  Tampico,  and 
not  in  the  commerce  of  Vera  Cruz  or  the  inland 
productions  of  Mexico,  mineral  or  agricultural. 

No  redivision  of  lands  in  Mexico,  no  partition 
of  haciendas  or  ranches,  can  solve  the  problems 
of  Mexico  or  bring  her  forward  to  the  position 
she  is  entitled  to  occupy  by  reason  of  her  natural 
wealth  and  millions  of  human  hands  ready  for 
work. 

Land  is  cheap  in  Mexico  and  is  to  be  had 


A WORLD  MAGNET  IN  MEXICO  31 


almost  for  the  asking,  but  of  what  use  is  an 
acre  or  a hundred  acres  to  a peasant  without 
plough,  animal  power,  or  machinery,  and,  above 
all,  without  transportation  or  near-by  markets? 

In  the  oil  regions  of  California,  rich  in  soil  and 
markets,  the  underground  wealth  is  reckoned  at 
just  twenty  times  the  value  of  the  soil  wealth. 

From  Tampico  to  Tuxpan  is  a tropical  jungle 
but  not,  as  often  assumed,  a miasmatic  marsh. 
It  is  a jungle  of  luxurious  foliage  over  soil  that 
can  grow  anything  in  the  world;  but  where  are 
the  markets  and  where  the  incentives  for  the 
native  population  to  labor? 

The  beginnings  of  markets,  the  beginnings  of 
transportation,  the  beginnings  of  incentive,  the 
beginnings  of  accumulation,  are  in  the  uncover- 
ing of  large  natural  or  planetary  wealth.  Out- 
side capital  will  take  the  risk  for  the  prize,  will 
employ  the  labor,  will  create  the  transportation, 
the  markets,  and  the  interchange  of  commodities 
that  make  foundations  for  modern  civilization. 
Natural  wealth  outside  the  path  of  development 
has  no  value.  The  Mexican  petroleum  fields 
had  absolutely  no  value  in  1900  and,  undevel- 
oped, will  have  the  same  value  in  two  thousand 
years  that  they  had  two  thousand  years  ago. 

To  him  who  would  study  fundamentals,  the 


32 


THE  MEXICAN  PROBLEM 


future  of  Mexico  is  already  on  the  map  at 
Tampico  because  there  is  here  exactly  what 
European  and  American  civilization  are  de- 
manding for  the  world’s  progress,  and  "whatever 
comes,  whether  the  development  is  by  Great 
Britain  or  Germany  or  by  North  or  South  Amer- 
ica, the  wealth  that  thence  can  give  light  and 
power  to  the  world  will  never  be  surrendered 
back  to  the  chemistry  of  Mother  Earth. 

The  writer  traveled  thirty-five  miles  west  into 
the  oil  fields  and  ninety  miles  south  beside  par- 
allel pipe  lines  carrying  oil,  gas,  and  water;  vis- 
ited the  terminals,  machine  shops,  carpenter 
shops,  tanks,  reservoirs,  and  shipping  wharves, 
and  saw  the  Mexicans  with  work  and  wages 
never  dreamed  of  half  a generation  ago. 

THE  CONTRAST 

Boston  people  put  the  Mexican  Central  Rail- 
road into  Tampico  more  than  thirty  years  ago, 
and  between  that  railroad  and  the  banks  of  the 
Panuco  River  are  still  the  half-naked  Mexican 
babies,  the  wan  mothers,  the  listless  boys  and 
girls,  without  opportunity,  and  the  fathers  with- 
out ambition  to  keep  in  repair  the  roofs  of  their 
low  huts. 

A dug-out  cedar  log  for  a canoe  with  a red 


FAITHFUL  MEXICANS 


33 


blanket  for  a sail  is  picturesque,  but  not  indus- 
trially expansive.  The  fishing  is  good,  and  exist- 
ence calls  for  but  little  energy.  On  the  other  side 
of  the  river  are  well-dressed  Mexican  families 
with  comfortable  homes,  pure  water,  electric 
lights,  moving  pictures,  wages,  and  opportunity 
for  more.  There  are  great  possibilities  of  savings 
in  these  wages  and  of  personal  development 
therefrom;  but  throughout  all  Mexico  there  is 
not  yet  a savings  bank. 

The  Mexicans  are  good  workers  when  tools 
and  instruction  come  to  their  hand.  So  far  as 
operated,  the  railroad  lines  of  the  country  and 
the  railroad  repair  shops  are  manned  entirely  by 
Mexicans.  There  are  several  independent  Tam- 
pico shipbuilding  and  repair  yards  all  owned  and 
operated  by  Mexican  graduates  from  the  repair 
plants  of  the  Mexican  Petroleum  Company  on 
the  other  side  of  the  river. 

FAITHFUL  MEXICANS 

When  in  1913  all  the  Americans  were  called 
out  of  Mexico,  the  native  employees  of  the 
Mexican  Petroleum  Company,  who  had  been 
assisting  in  the  pumping  stations  and  in  the 
shops,  saw  to  it  that  never  a stroke  was  missed, 
nor  was  there  a barrel  less  oil  produced,  nor  any 


34 


THE  MEXICAN  PROBLEM 


damage  or  harm  to  the  company’s  property 
entrusted  entirely  to  its  own  faithful  Mexican 
workmen. 

When  in  June,  1916,  the  military  governor  of 
Tampico  declared  war  on  the  United  States  and 
the  Mexican  Petroleum  Company  took  out  nine 
hundred  Americans  on  two  oil  steamship  carriers 
and  the  yacht  Casiana,  again  the  pumps  never 
missed  a stroke  and  the  Mexican  employees  in 
about  ten  days  put  461,000  barrels  of  oil  in  the 
tanks  and  also  loaded  two  steamers  for  export; 
nor  was  there  any  thought  of  interference  or  of 
attack  upon  the  property. 

Superintendent  Green  declared  that  after  such 
faithfulness  the  Mexicans  should  continue  to 
run  the  pumps  and  the  machinery.  A 

It  is  no  wonder,  therefore,  that  the  party  of 
Americans  visiting  Tampico  in  March,  1917, 
were  everywhere  welcomed  with  smiles  or  that  a 
Mexican  youth  in  sandals,  mistaking  the  writer 
for  a company  manager,  applied  in  Spanish  for 
work,  declaring  that  he  had  a wife  and  babies 
and  that  he  needed  food  and  clothing. 

That  is  the  need  of  Mexico  to-day  — oppor- 
tunity to  labor,  opportunity  for  the  family,  op- 
portunity for  food,  clothing,  better  shelter,  and 
better  social  conditions. 


INTO  THE  JUNGLE 


35 


And  this  is  exactly  what  American  and  Euro- 
pean capital  and  organization  have  brought  to 
Tampico,  attracted  by  its  underground  wealth, 
and  this  is  what  will  ultimately  redeem  Mexico 
and  forward  her  people  by  industrial  oppor- 
tunity. 


INTO  THE  JUNGLE 

Nowhere  in  the  tropics  can  one  make  a more 
interesting  trip  than  to  take  a swift  launch  or  a 
lazy  stern-wheel  barge  and  at  daybreak  stir  the 
flying-fish  and  the  jungle  parrots  of  the  Chijol 
Canal,  pass  on  through  shallow  Tamiahua  Lake, 
where  the  waterfowls  before  their  migration  may 
be  seen  spread  out  in  all  directions  for  twenty 
miles,  note  the  electric  light  of  the  oil  pumping 
stations,  contrasting  with  the  distant  dark  moun- 
tain peaks,  and  glimpse  through  the  jungle  the 
cleared  hillside  fields  where  the  British  oil  in- 
terests, represented  by  Lord  Cowdray,  have 
planted  the  mark  of  English  thoroughness  in 
field  and  building  construction. 

The  water  trip  now  terminates  sixty  miles 
south  at  San  Geronimo,  but  later  may  reach 
Tuxpan,  forty  miles  beyond.  Here  at  a small 
inlet  dividing  the  British  and  American  develop- 
ments you  mount  motor  handcars  and  fly  like 


36 


THE  MEXICAN  PROBLEM 


the  wind  through  the  canebrake  and  the  bamboo 
of  the  jungle  up  hill  and  down  and  around  sharp 
curves.  Before  you  can  get  your  breath  you  are 
amid  the  oil  derricks  of  several  American  and 
English  companies  drilling  on  their  border  lines 
as  in  Texas  and  California. 

But  here  the  contests  between  contending  in- 
terests must  be  sharper,  for  no  man  knows  in  this 
country  to  what  extent  at  two  thousand  feet  in 
depth  a neighboring  oil  well  may  exhaust  his 
land. 

The  Mexican  Petroleum  Company  would  ap- 
pear to  have  the  advantage  at  this  point,  as  no 
other  American  company  has  yet  a pipe  line. 

MEXICAN  GUSHERS 

Pausing  before  Chinampa  Number  1,  the  oil 
was  found  bubbling  up  around  the  drill,  and 
orders  were  given  by  Mr.  Doheny  to  entertain 
the  American  party  if  possible  on  the  return  trip 
in  the  afternoon  with  the  bringing  in  of  the  well. 
A few  more  strokes  on  the  drill  and  the  gas  and 
oil  bubbled  higher,  but  it  did  not  flow  that  day. 

In  this  entire  territory  there  is  no  pumping  of 
wells  as  in  California.  Every  well  flows  or  gushes. 
Two  days  later,  or  Friday,  March  16,  Chin- 
ampa Number  1 “came  in”  and  flowed  for  two 


THE  GUSHER  POTRERO  4,  BEFORE  BEING  CAPPED 


MEXICAN  GUSHERS 


37 


and  a half  minutes  over  the  crown  pulley,  eighty- 
two  feet  high.  Then  they  shunted  the  flow  into 
the  pipe  line  and  the  later  report  was  ten  thou- 
sand barrels  per  day  from  this  well,  with  expec- 
tation that  she  would  later  “drill  herself  in.” 
This  means  that  when  cleared  for  action  she 
might  be  a third  great  well  for  the  Mexican 
Petroleum  Company  with  capacity  of  several 
times  ten  thousand  barrels  per  day. 

As  this  is  the  one  well  in  competitive  territory, 
the  supply  at  other  wells  of  this  company  must 
be  still  further  shut  in  to  permit  full  flow  here. 

On  the  hilltop,  high  above  the  surrounding 
country,  blaze  day  and  night  twelve  gigantic  gas 
flames  relieving  the  pressure  on  the  famous 
Casiano  well  of  the  Mexican  Petroleum  Com- 
pany which  is  in  the  valley  beyond,  with  beauti- 
ful surrounding  hills,  and  probably  geologically 
isolated  in  this  oil  country. 

You  climb  in  and  out  of  this  valley  by  team 
or  in  saddle  and  a clearer  picture  one  would  go 
far  to  see  — cultivated  fields,  neat  houses,  pump- 
ing machinery  moving  like  clock-work,  but  set 
in  a tropical  fruit  and  flower  garden. 

“Casiano  Number  7”  came  in  September  10, 
1910,  at  seventy-five  thousand  to  eighty  thou- 
sand barrels  a day  and  is  now  shut  down  to 


38 


THE  MEXICAN  PROBLEM 


twenty-five  thousand  barrels  a day  under  two 
hundred  and  sixty-five  pounds  pressure;  but 
more  than  double  this  amount  could  be  taken 
from  the  well  were  there  shipping  facilities  from 
Tampico.  “Casiano  Number  6”  was  flowing 
fifteen  thousand  barrels  a day  when  it  was 
closed  in  a month  before  Number  7 came  in. 

It  is  possibly  immaterial  from  which  well  the 
Casiano  district  is  tapped,  for  no  man  knows  to 
what  extent  in  this  valley  Number  7 is  drawing 
from  the  territory  of  Number  6,  as  the  geology 
in  these  oil  fields  is  not  analogous  to  anything 
else  known  on  the  continent.  Number  7 cannot 
be  shut  in  more  closely  without  danger,  for  any 
increased  restraint  causes  the  ground  to  break 
forth  with  oil  a few  hundred  feet  distant. 

Nearly  twenty  miles  farther  south  by  the  Mex- 
ican Petroleum  Company’s  railway  and  pipe, 
water  and  gas  lines  is  the  greatest  oil  well  in  the 
world  to-day,  — Cerro  Azul,  which  means  “blue 
hill,”  and  which  “blew  in”  February  9,  1916, 
and  shot  1,400,000  barrels  of  oil  into  the  air 
before  it  could  be  capped.  One  half  of  this  was 
saved  by  a quickly  constructed  reservoir.  The 
column  of  oil  measured  six  hundred  feet,  and 
when  it  was  shut  in  the  delivery  was  at  the  rate 
of  more  than  260,000  barrels  per  day. 


CHAPTER  IV 


WHO  SHALL  HELP  THE  ENGULFED  PEOPLE  ? 

w hen  you  have  traveled  nearly  twenty-five 
hundred  miles  by  land  and  water  to  reach  at 
Cerro  Azul  the  greatest  oil  well  in  the  world, 
you  see  in  the  jungle  only  a cleared  field,  near 
the  center  of  which  is  a mound  of  earth  not 
twenty  feet  high,  set  against  “mountains  of 
blue,”  and  the  only  evidence  of  human  interest 
is  an  ordinary  pressure  gauge  embedded  near 
the  top  of  this  earth  mound. 

But  you  stand  on  the  top  of  this  little  mound 
and  feel  the  pulsation  of  something  almost  hu- 
man beneath  your  feet  — a crater  of  energy  that 
taxed  the  ingenuity  of  man  for  days  to  harness 
it  and  cap  down  a gas  and  oil  pressure  measur- 
ing above  one  thousand  pounds  per  square  inch, 
and  flowing  oil  at  a rate  equaling  about  one 
quarter  of  the  oil  production  of  the  whole  world. 

POSSIBILITIES  OF  DEVELOPMENT 

One  can  but  reflect  that  the  Almighty  per- 
mitted the  tapping  of  his  reservoirs  of  oil  only 


40 


THE  MEXICAN  PROBLEM 


when  the  whole  world  was  coming  into  line  to 
receive  the  benefits. 

The  City  of  Mexico  is  one  hundred  and  sev- 
enty miles  distant  southwest.  With  the  coun- 
try at  peace  and  holding  the  confidence  of  the 
credit  markets  of  the  world,  an  easily  con- 
structed pipe  line  could  be  delivering  daily  sev- 
eral million  cubic  feet  of  gas  in  Mexico  City  for 
warmth,  light  and  power  to  quickly  obliterate 
the  ravages  of  internal  wars.  But  there  the  two 
million  dollar  gas  plant  is  shut  down  after  losing 
one  hundred  thousand  dollars  a year  for  four 
years,  and  the  threat  comes  from  the  Carranza 
government  that  this  plant  will  be  confiscated 
unless  it  is  put  in  operation.  Confidence  with 
credit  is  not  commandeered  overnight.  Through- 
out the  whole  oil  region,  and  for  the  safety  of 
the  country  and  its  inhabitants,  ten  million 
cubic  feet  of  gas  are  daily  burned  in  high  flam- 
ing torches. 

It  is  not  what  Mexico  is  now  doing,  but  the 
world  possibilities  in  it,  that  one  may  see  and 
practically  feel  as  he  stands  with  his  feet  on  the 
Cerro  Azul  mound  of  earth  and  notes  the  force 
beneath  that  is  delivering  into  the  pipe  line 
twenty-five  thousand  barrels  of  oil  per  day  and  is 
pulsating  to  deliver  ten  times  this  amount. 


OIL  VERSUS  COAL 


41 


The  world  now  needs  it  as  never  before,  and 
Mexico  needs,  as  never  before,  the  outside  help 
that  this  magnet  of  wealth  can  bring  to  it. 

OIL  VERSUS  COAL 

The  English  have  thoroughly  experimented 
with  fuel  oil  and  demonstrated  that,  used  in 
a Diesel  engine,  one  ton  of  oil,  or  6.8  barrels, 
does  the  work  of  six  tons  of  coal;  and  the  normal 
price  in  England  is  about  five  dollars  per  ton 
for  each,  although  present  war  prices  are  nearly 
double.  Burned  under  boilers  three  tons  of  oil 
equal  six  tons  of  coal. 

The  demonstration  was  clear  that  the  Diesel 
engine  ship  can  be  operated  at  fifty  per  cent  of 
the  cost  of  the  coal  burner.  The  war  has  inter- 
rupted the  conversion  of  the  world’s  ocean  ton- 
nage from  coal  to  oil,  but  the  future  of  oil  on 
land  and  sea  has  been  proved  and  can  be  seen 
from  the  pressure  gauge  on  Cerro  Azul;  and 
from  the  same  point  can  be  seen  the  redemption 
and  regeneration  of  Mexico,  the  moment  a 
brotherly  hand  can  be  extended  to  her. 

England  and  Germany  both  see  it,  for  in 
these  countries  business  and  government  work 
together  for  national  development  and  the  up- 
lift of  the  people.  In  time  Mexico  and  the 


42 


THE  MEXICAN  PROBLEM 


United  States  also  should  see  it,  and  demand 
that  government  and  business  cooperate  and 
that  Mexico  and  the  United  States  be  mutually 
helpful. 

We  have  no  right  to  strike  down  the  govern- 
ments of  Mexico  one  after  another  and  refuse 
to  the  government  and  people  financial,  busi- 
ness, and  political  assistance. 

The  only  assistance  the  people  of  Mexico 
have  had  from  the  United  States  has  been  busi- 
ness assistance  in  railroad,  mining,  and  oil  de- 
velopment. 


THE  GERMAN  POSITION 

Is  it  any  wonder  that  Mexico  reaches  out  for 
national  assistance,  first  to  Japan  and  lastly  to 
Germany?  Since  returning,  I have  had  con- 
firmation from  European  sources  of  the  report 
that  two  large  deposits  of  German  money  have 
been  made  for  the  account  of  Carranza.  This 
does  not  mean  war  upon  the  United  States  by 
the  people  of  Mexico. 

It  is  difficult  to  predict  regarding  Germany. 
I sawr  the  German  war  machine  after  Sedan  and 
Gravelotte.  I visited  the  country  a few  years 
ago  and  printed  that  Germany  was  preparing 
for  a European  war  and  to  strike  both  Russia 


THE  GERMAN  POSITION 


43 


and  France.  Few  Americans  would  believe  it. 
I returned  to  Germany  again  in  1913,  noted  the 
military  and  financial  measures,  the  decrees  for- 
bidding any  new  enterprises,  and  then  declared 
that  Germany  could  not  afford  a world  war. 
Germany  got  her  war,  but  says  England  is  to 
blame,  because  if  England  had  declared  her  in- 
tention to  come  in,  Germany  would  never  have 
thrown  down  the  gage  of  battle. 

Although  plans  have  miscarried,  it  should 
not  be  forgotten  that  Germany  is  one  vast  busi- 
ness organization,  intertwined  with  tariff,  gov- 
ernment and  military  power.  The  Germans 
were  experting  the  Cerro  Azul  oil  field  and  con- 
templated millions  of  investment  therein  before 
the  war.  It  is  good  business  for  Germany  to 
give  Carranza  financial  assistance  with  a view 
to  a standing  after  the  war.  It  would  be  poor 
business  for  either  Germany  or  Mexico  to  lay 
the  gage  of  battle  on  the  Rio  Grande,  for 
thereby  the  business  aims  of  both  would  be 
defeated. 

Germany  looks  ahead  and  wants  business 
after  the  war.  Mexico  needs  financial  assistance 
and  will  need  business  development  for  many 
years  to  come. 


44 


THE  MEXICAN  PROBLEM 


our  government’s  wobbles 

The  United  States  has  had  no  steady  business 
or  political  policy  toward  Mexico.  It  has  been 
“Go  in!”  “Come  out!”  “Go  back!”  “Stay 
out!”  The  Washington  declaration  has  been, 
“Down  with  the  tariff  and  into  the  export  field,” 
and  when  hands  have  been  uplifted  from 
Mexico,  our  nearest  and  most  needy  field  for 
export,  Mr.  Bryan  has  responded,  “Why  don’t 
you  stay  at  home?” 

I heard  it  declared  in  Mexico,  “Every  Wilson 
policy  toward  Mexico  has  been  wrong.  Never 
has  the  right  thing  been  done  at  the  right  time; 
but  in  extenuation  of  Mr.  Wilson  it  must  be  ad- 
mitted that  nobody  can  now  say  what  would 
have  been  the  correct  policy  toward  Mexico.” 

The  strong  policy  was  when  Evarts  wrote  to 
our  Minister  Foster  in  Mexico  in  August, 
1878:  — 

The  first  duty  of  a government  is  to  protect  life 
and  property.  This  is  a paramount  obligation. 
For  this  governments  are  instituted,  and  govern- 
ments neglecting  or  failing  to  perform  it  become 
worse  than  useless.  This  duty  the  government  of 
the  United  States  has  determined  to  perform  to 
the  extent  of  its  power  toward  its  citizens  on  the 
border.  It  is  not  solicitous,  it  never  has  been, 


THE  WILSON  REVERSE 


45 


about  the  methods  or  ways  in  which  that  protec- 
tion shall  be  accomplished,  whether  by  formal 
treaty  stipulation,  or  by  informal  convention; 
whether  by  the  action  of  judicial  tribunals  or 
that  of  military  forces.  Protection  in  fact  to 
American  lives  and  property  is  the  sole  point 
upon  which  the  United  States  are  tenacious. 

This  practical  order  from  the  United  States 
enabled  Diaz  to  keep  the  peace  in  Mexico  for 
thirty  years.  He  was  able  to  tell  his  generals, 
“You  will  maintain  order  and  protect  life  and 
property  or  somebody  else  will.” 

THE  WILSON  REVERSE 

Then  both  Taft  and  Wilson,  by  words  and 
acts,  reversed  the  Evarts  policy.  “As  long  as 
I am  President,  nobody  shall  interfere  with 
them,”  said  Wilson  at  Indianapolis. 

The  national  government  in  Mexico  became 
powerless.  Wilson’s  words  were  posted  over 
Mexico.  It  was  “open  season  ” for  all  who  could 
get  the  guns. 

Mr.  Wilson  announced  that  it  would  take 
more  than  four  hundred  thousand  men  from 
outside  to  restore  order. 

I have  reason  to  believe  that  the  military  re- 
port to  Mr.  Wilson  was,  “Four  hundred  thou- 
sand men  cannot  do  it  if  directed  from  Wash- 


46 


THE  MEXICAN  PROBLEM 


ington.  But  forty  thousand  men  would  be  too 
many  if  directed  by  the  army  officers  alone.” 

Having  blundered  in  and  out  of  Mexico,  it  is 
now  clearly  the  duty  of  the  United  States  to 
reflect  upon  the  situation  and  determine  upon 
what  basis  it  can  extend  a cooperative  and  effec- 
tive helping  hand  to  that  unhappy  country. 
If  we  do  not  do  it,  somebody  else  will. 

There  is  no  possible  reading  of  the  Monroe 
Doctrine  that  forbids  Germany  or  England 
making  the  business  development  of  Mexico  or 
rendering  financial  assistance  to  the  Mexican 
government  and  people.  But  when  Mexico  has 
to  turn  from  her  natural  guardian  and  protec- 
tor to  European  powers,  the  United  States  will 
be  deservedly  “counted  out,”  both  north  and 
south  of  the  Panama  Canal. 

THE  MAN  WITH  THE  HOE 

No  country  in  the  world  needs  closer  rela- 
tions with  the  oil  development  of  Mexico  than 
the  United  States.  The  future  demands  not 
only  redemption  of  the  Mexican  man  of  the 
soil,  but  the  redemption  of  the  American  farmer 
as  well. 

Agriculture  is  basal  in  the  world’s  progress. 
All  industries,  in  both  peace  and  war,  rest  upon 


THE  REDEMPTION  OF  AGRICULTURE  47 


it.  But  “the  man  with  the  hoe”  still  indicts 
Christian  civilization. 

He  has  no  eight-hour  day;  he  competes  with 
women  and  children  who  put  no  price  on  their 
labor;  his  surplus  products  are  dumped,  almost 
as  refuse,  his  milk  to  the  milk  contractor,  his 
potatoes  to  the  starch  factory.  He  has  no  stor- 
age for  apples  when,  in  an  abundant  season, 
they  are  not  worth  the  price  of  the  barrel. 
Heaven’s  sun  itself  appears  to  compete  with 
him.  He  has  never  been  taught  that  there  is 
only  one  wealth  for  the  farmer,  and  that  is  large 
storage  backed  by  broad  acres,  quickly  culti- 
vated by  machinery.  His  great  machine,  the 
horse,  for  spring  and  fall  ploughing,  “eats  his 
head  off”  in  an  idle  winter. 

THE  REDEMPTION  OF  AGRICULTURE 

His  redemption  cannot  come  through  the  par- 
cel post  or  oil-smoothed  roads  for  city  motors, 
or  by  state  and  national  agricultural  bureaus. 

The  redemption  of  “the  man  with  the  hoe” 
will  come  through  the  gasolene  motor  that  will 
plough  spring  and  fall,  cultivate  all  summer,  chop 
wood  in  the  winter,  and  not  “eat  its  head  off.” 

The  ambition  of  Henry  Ford  is  a gasolene 
tractor  within  reach  of  the  farmer.  Success  here 


48 


THE  MEXICAN  PROBLEM 


would  mean  more  for  the  world  than  all  gaso- 
lene motor  development  to  date. 

It  would  solve  the  labor  problem  on  the  farm; 
enable  the  individual  farmer  to  hold  broad  acres, 
by  quick  cultivation  and  crops  quickly  stored. 
The  result  from  such  prosperity  for  the  farmer 
would  be  great  stores  of  food,  steadying  prices 
for  the  world. 

The  farm  power,  the  food  power,  the  sea 
power,  the  world  power,  cry  out  for  gasolene 
and  fuel  oil.  The  Pennsylvania  and  Indiana  oil 
fields  are  failing.  California  is  exhausting  pocket 
after  pocket.  The  great  oil  area  of  the  world 
to-day  stretches  from  Kansas  to  Tehuantepec. 
The  lightest  oil  is  at  both  these  extreme  points. 
The  appearance  is  that  the  great  central  reser- 
voirs are  in  the  Mexican  field. 

Their  conservation  is  a world-wide  necessity. 
Their  protection  is  the  duty  of  all  nations. 

NO  OIL  SANDS  IN  MEXICO 

Very  few  people  in  the  world  know  the  geolog- 
ical structure  of  these  oil  fields.  No  one  in  the 
world  to-day  knows  it  perfectly.  Nothing  yet 
uncovered  in  the  United  States  resembles  the 
underground  formation  in  Mexico.  In  California 
you  pump  from  well-defined  areas  of  oil  sands 


STORAGE  RESERVOIR  AT  l’OTRERO  — 2,500,000  BARRELS 


SOME  OF  THE  55,000-BARRET,  STORAGE  TANKS,  MEXICAN  EAGLE 
OIL  COMPANY 


THE  DOS  BOCAS  CATASTROPHE  49 


two  to  three  thousand  feet  deep.  The  porosity 
of  oil  sand  is  fourteen  per  cent,  and  those  wells 
do  not  average  two  hundred  barrels  a day. 

Yet  there  are  no  oil  sands  in  Mexico.  About 
two  thousand  feet  below  the  level  of  the  sea  the 
oil  drills  strike  the  bed  of  ancient  oceans  and 
from  coral  reefs  with  sixty  per  cent  of  porosity 
spurt  the  greatest  oil  wells  in  the  world.  No 
pipe  line  yet  constructed  has  been  able  to  re- 
ceive the  full  measure  of  one  of  these  gushers. 

South  of  Cerro  Azul  is  the  great  Potrero  oil 
well  of  the  Mexican  Eagle  or  English  company. 
It  gives  the  entire  forty  thousand  barrels  per 
day  that  this  company  can  export  on  present 
shipping  facilities,  but  this  is  not  half  its  ca- 
pacity. Lord  Cowdray  is  giving  his  whole  time 
to  his  country  at  the  head  of  the  British  avia- 
tion department,  so  essential  on  land  and  sea 
in  winning  the  war,  and  his  pipe  lines  and  re- 
fineries work  automatically  on  this  coast.  When 
the  war  is  over  this  field  may  compete  for  his 
great  organization  and  engineering  talent. 

THE  DOS  BOCAS  CATASTROPHE 

Above  to  the  north,  near  the  terminus  of  the 
Mexican  Petroleum  Company’s  railroad  at  San 
Geronimo,  on  the  borders  of  the  Tamiahua 


50 


THE  MEXICAN  PROBLEM 


Lagoon,  still  rises  a cloud  of  steam  from  the 
ruins  of  the  famous  oil  well  Dos  Bocas. 

Here,  in  1909,  came  in  unexpectedly  the 
world’s  greatest  gusher.  Through  an  eight-inch 
pipe  line  shot  a column  into  the  air  fifteen  hun- 
dred feet  high  by  actual  theodolite  measure- 
ment; then  the  earth  heaved  and  belched  three 
hundred  million  barrels  of  liquid  per  day.  How 
much  of  it  was  oil  nobody  could  say.  The  tor- 
rential flood  reached  the  boiler  fires  and  soon 
in  place  of  that  eight-inch  pipe  was  a heaving, 
seething  mass,  one  hundred  acres  in  extent. 
Soldiers  as  well  as  civilians  fought  the  flow  and 
flames  to  restrict  the  area  of  damage,  but  for 
many  nights  Dos  Bocas  lit  up  sea  and  shore 
for  one  hundred  and  fifty  miles  around. 

THE  HUMAN  CATASTROPHE 

Was  this  an  advanced  flash  picture  of  the 
Mexico  to  follow?  At  Dos  Bocas  they  worked 
even  to  save  the  fish  of  the  river  and  the  lagoon ; 
but  Mexico,  abandoned  by  its  friends  and  with 
notice  to  everybody  else  to  keep  out,  was  to 
become  a politically  heaving  mass,  with  Mexi- 
cans, Americans,  and  Chinese  massacred  in  the 
Mexican  war  flames. 

China  got  promises.  Americans,  Germans, 


THE  HUMAN  CATASTROPHE 


51 


and  English  filed  claims  and  the  strongest  na- 
tions of  the  world  filed  theirs  at  Washington; 
but  where  will  the  millions  of  the  good  people 
of  Mexico  who  want  work,  wages,  and  human 
progress  lodge  their  claims  or  cries? 

I shall  never  forget  the  sincere,  earnest  em- 
phasis of  Edward  L.  Doheny,  controlling  owner 
in  the  Mexican  Petroleum  Company,  as  on 
March  16,  1917,  he  declared,  on  his  yacht  Casi- 
ana  heading  into  the  “northers”  on  the  Gulf  of 
Mexico:  “I  would  sink  all  my  interest  on  this 
coast  ten  thousand  feet  deep  in  the  sea  to  give 
the  good  people  of  Mexico  right,  justice,  and 
freedom  in  a modern  system  of  civilization.” 


CHAPTER  V 


WHY  NO  AID  FOR  MEXICO? 

It  is  difficult  to  interest  the  people  of  the  United 
States  in  the  sufferings  of  the  people  of  Mexico 
when  our  sympathies  and  pocketbooks  are  en- 
gaged in  behalf  of  five  million  men  in  the  hospi- 
tals of  Europe,  six  million  in  prison  camps,  and 
seven  million  war  cripples,  a total  of  eighteen 
million  daily  sufferers,  all  making  the  strongest 
appeals  through  war-relief  movements  organ- 
ized in  the  United  States. 

This  is  an  appalling  number  of  sick,  maimed, 
and  in  prison,  aggregating  more  than  the  total 
population  of  Mexico.  There  are  forty  million 
more  headed  in  the  same  direction  and  behind 
there  must  be  two  hundred  million  in  suffering 
families. 

This  is  the  only  explanation  I can  give  for  the 
dulled  and  deaf  ears  upon  which  fall  the  appeals 
in  the  name  of  humanity  to  give  sympathetic 
aid  to  the  people  of  Mexico  now  adrift  in  politi- 
cal, financial,  and  social  seas  with  no  chart  or 
compass  and  no  directing  voice  except  that  of 


THE  NEW  CONSTITUTION 


53 


President  Wilson,  who  declares,  “They  must 
fight  it  out  among  themselves.” 

GERMAN  TROUBLES 

Nobody  in  this  country  desires  any  military 
intervention  in  Mexico,  and  the  only  thing  that 
can  at  the  present  time  invite  it  would  be  the 
German  activities.  All  governments  and  forms 
of  government  in  Mexico  must  understand  the 
danger  in  this.  German  dynamite  would  do 
more  damage  to  rulers  and  would-be  rulers  in 
Mexico  than  it  would  to  the  military  forces  of 
the  United  States. 

It  is  said  that  the  new  Carranza  constitution, 
with  its  confiscatory  measures,  in  effect  May  1, 
1917,  is  primarily  an  attack  upon  Spanish,  Brit- 
ish, French,  and  Belgian  interests  in  Mexico  and 
only  incidentally  an  attack  upon  the  interests 
of  citizens  of  the  United  States  in  that  country. 

While  the  new  constitution  decrees  that  there 
shall  be  no  retroactive  measures  it  declares  that 
all  wealth  beneath  the  surface,  mineral  and  oil, 
is  the  property  of  the  State. 

THE  NEW  CONSTITUTION 

There  are  also  provisions  in  the  new  consti- 
tution dealing  with  the  amounts  of  land  any 


54 


THE  MEXICAN  PROBLEM 


one  individual  or  corporation  may  own.  No 
foreign  corporation  may  acquire  land  or  prop- 
erty or  water  rights  within  fifty  kilometres  of 
the  seacoast  or  within  one  hundred  kilometres 
of  the  border.  Any  outside  corporation  desir- 
ing to  acquire  property  in  Mexico  must  under 
the  new  constitution  renounce  all  foreign  citi- 
zenship in  relation  to  that  property  and  agree 
to  be  subject  to  the  constitution  and  laws  of 
Mexico  without  right  of  appeal. 

It  will  thus  be  seen  that  under  the  new  con- 
stitution the  way  is  open  for  the  reigning  powers 
in  Mexico  to  deal  with  foreign  interests  pretty 
much  as  they  please.  There  are  unlimited 
powers  of  taxation,  regulation,  and  of  decrees 
concerning  ownership,  and  the  penalty  for  non- 
compliance  is  confiscation. 

The  result  to  British,  French,  Belgian,  United 
States,  and  all  other  foreign  interests  must  be 
steadily  exerted  “pressure,”  and  it  may  be  as- 
sumed that  this  “pressure”  will  be  exerted  far 
enough  to  produce  revenues  and  regulations 
looking  toward  nationalization  of  present  for- 
eign-owned  properties. 


WAR  ALLIANCES 


55 


WAR  ALLIANCES  MAT  HELP  IN  MEXICO 

But  self-interests  or  the  law  of  self-preserva- 
tion will  cause  a halt  when  the  “pressure”  faces 
danger  in  the  powers  of  resistance. 

The  safety  for  foreign  interests  in  the  present 
situation  is  the  entry  of  the  United  States  into 
the  war  as  an  ally  of  Great  Britain.  All  the 
allies  are,  therefore,  now  joined  in  the  protection 
of  the  British  naval  oil  base  in  Mexico. 

General  Joffre  and  that  calmly  poised,  well- 
balanced  brain  of  statesmanship  in  Balfour, 
with  their  military  and  economic  associates,  on 
the  soil  of  the  United  States,  mean  very  much 
for  Mexico.  Joffre,  the  heart  of  France  touch- 
ing the  heart  of  America,  and  Balfour,  the  far- 
sighted, economic  statesman,  link  the  civiliza- 
tions of  two  continents  in  a way  that  means  not 
only  peace  for  Europe,  but  peace  for  Mexico. 

Balfour  declared  two  years  ago,  when  I was 
in  England:  “The  world  needs  industrial  Ger- 
many; that  must  not  be  crushed,  but  Prussian 
militarism  must  be  blotted  out  that  the  true 
Germany  may  live.”  This  will  soon  be  the  sen- 
timent of  the  entire  globe,  and  Mexico  will  not 
be  neglected  in  the  enfolding  arms  of  a future 
universal  peace. 


56 


THE  MEXICAN  PROBLEM 


MEXICAN  PRESSURE 

How  Mexico  “is  pressing  foreign  interests” 
is  illustrated  in  a decree  from  Mexico  City  more 
than  doubling  all  the  taxes  on  oil.  The  big  Eng- 
lish company  and  the  Oil  Fields  of  Mexico  Com- 
pany, incorporated  in  New  Jersey,  but  selling 
its  oil  to  Lord  Cowdray’s  concern,  have  each  in 
their  concessions  the  promise  of  immunity  from 
export  tax  for  fifty  years.  They  and  all  other 
companies  are  now  paying  about  five  cents  per 
barrel  American  gold  as  an  export  tax,  and  by  na- 
tional decree  must  from  May  1,  1917,  pay  about 
eleven  cents  per  barrel  export  tax,  or  nearly 
twenty  per  cent  of  the  gross  value  of  the  crude 
oil  as  exported.  The  average  price  of  exported 
oil  at  the  coast  I figure  is  about  sixty  cents  per 
barrel.  Many  contracts  are  higher  and  many 
are  lower.  Many  interior  oil  wells  would  be 
glad  to  sell  at  ten  cents  per  barrel  to  anybody 
who  would  build  a pipe  line  to  them. 

The  decree  also  places  an  export  tax  of  one 
cent  a gallon  on  crude  gasolene  and  of  one  half- 
cent  a gallon  on  refined  gasolene.  Some  of  the 
late  contracts  for  export,  notably  those  of  the 
Mexican  Petroleum  Company,  have  a proviso 
that  the  buyers  under  contract  must  pay  any 
increased  taxes. 


THE  PEACE  OF  CARRANZA 


57 


The  British  interests  have  paid  their  taxes 
under  protest  and  will  probably  continue  so  to 
do.  This  is  another  claim  mounting  up  at 
Mexico  City  and  Washington,  for  it  will  be  filed 
at  both  places. 

THE  PEACE  OF  CARRANZA 

The  claim  is  constantly  made  from  Mexico 
City  that  Carranza  has  quieted  Mexico  except 
in  mountain  regions  or  distant  places  and  should 
have  financial  support  from  the  United  States. 
Without  desiring  to  make  trouble,  let  me  nar- 
rate some  instances  that  refute  this  claim. 

Riding  on  a flat  car  toward  Cerro  Azul  in 
March,  1917,  and  within  two  hundred  miles  of  the 
City  of  Mexico,  the  telegraph  poles  were  noted 
upon  which,  a few  days  preceding,  the  anti- 
Carranzistas  had  hanged  six  Indians  in  reprisal 
for  the  raid  of  their  tribe  upon  a village  near  by. 
The  claim  was  that  the  Carranzista  people  had 
given  this  Indian  tribe  arms  and  enabled  them 
to  raid,  pillage,  and  burn  the  village  of  Amatlan, 
the  ruins  of  which  were  visible  on  the  mountain 
side  as  we  passed  on  the  railroad  a few  miles 
away. 

This  apparently  had  been  the  largest  native 
city  or  village  between  Tampico  and  Tuxpan. 


58 


THE  MEXICAN  PROBLEM 


I have  never  been  able  to  find  any  account  in 
the  papers  of  its  destruction,  but  the  report  at 
the  railroad  station  was  that  Amatlan  con- 
tained three  hundred  and  fifty  Mexican  famil- 
ies, nearly  of  all  whom  perished.  Those  who 
were  not  shot  were  burned  in  the  firing  of  the 
village. 

Yet  on  this  trip  I met  only  two  soldiers  and 
two  rifles;  one  an  anti-Carranzista  guard  at  a 
railroad  station,  and  the  other  a picturesque 
anti-Carranzista  general  who  rode  with  our 
party  through  the  hills  after  we  left  the  railroad 
train.  It  wras  said  that  he  had  associated  with 
him  thousands  of  anti-Carranzistas. 

When  the  government  troops  appear,  the 
rebels  are  just  plain  Mexican  people  with  no 
arms  and  no  organization.  When  the  army 
divides  into  small  bodies,  the  plain  Mexican 
people  are  suddenly  in  the  bush  with  plenty  of 
cartridges  and  the  government  soldiers  are  am- 
bushed or  perhaps  given  opportunity  to  change 
sides. 

Similarly,  when  the  soldiers  surround  the 
opposition,  the  anti-Carranzistas  are  either  re- 
cruited or  shot.  It  is  astonishing  how  many 
Mexican  prisoners,  when  the  question  is  asked, 
“Carranzista  or  anti-Carranzista?”  will  respond 


VIEW  OF  TUXPAN,  SHOWING  STORAGE  TANKS  AND  STEAMER  LOADING  CARGO  OF 
MEXICAN  OIL  FROM  DEEP-SEA  LOADING  LINES 


THE  PEACE  OF  CARRANZA 


59 


“anti-Carranzista”  and  receive  their  dose  of 
cold  lead  without  a murmur.  Those  who  respond 
“Carranzista”  are  handed  a musket. 

In  the  latter  part  of  April,  1917, 1 received  word 
that  a personal  friend  of  mine,  the  manager  of 
one  of  the  oil  companies  in  Mexico,  had  that 
month  had  a terrible  experience.  He  started 
from  the  coast  for  the  City  of  Mexico,  going 
first  north  to  Monterey,  as  the  southern  rail- 
road route  was  interrupted  by  disorder.  On  the 
main  line,  and  nearer  Mexico  City  than  the 
northern  boundary,  the  escorted  train  was  as- 
saulted by  one  hundred  brigands,  and  thirty  of 
the  passengers  and  their  defenders  were  killed. 
There  can  be  no  denial  of  my  report.  But  I 
have  again  had  the  news  records  of  this  country 
searched  only  to  find  that  no  one  has  now  any 
interest  to  gather  or  print  such  news. 

Carranza  is  still  appealing  for  financial  help 
north,  south,  east,  and  west  when  he  should  ask 
the  military  cooperation  of  the  United  States. 


CHAPTER  VI 


THE  FINANCIAL  BENEFITS  OF  DISORDER 

Washington  notes,  words,  sentiments,  and  ac- 
tions have  produced  quicker  results  in  Mexico 
than  in  any  other  country  in  the  world. 

From  various  parts  of  Mexico,  between  the 
border  and  Mexico  City,  comes  word  that  since 
Congress  voted  billions  of  money  for  war  ex- 
penditure and  began  plans  for  an  enormous 
army,  all  the  “generals”  in  Mexico  have  sud- 
denly become  very  polite  to  foreigners,  espe- 
cially Americans.  All  the  threatenings  from 
German  sources  in  Mexico  likewise  suddenly  be- 
come non-explosive. 

There  is  one  thing  that  talks  in  international 
relationships  and  that  is  the  loading  up  of  the 
guns.  It  does  not  make  any  difference  in  which 
direction  the  guns  are  aimed.  Uncle  Sam  has 
not  a thought  about  Mexico  at  the  present  time; 
his  guns  are  all  aimed  for  Germany.  But  for  the 
first  time  all  the  Mexican  generals  and  would-be 
generals  know  that  Uncle  Sam  has  got  a gun, 
has  started  to  load  it,  and  is  putting  so  many 
millions  of  men  behind  it  that  nobody  can  now 


NATURE’S  RESERVES 


61 


say  with  safety  how  much  of  a squint  he  may 
take  around  the  horizon  when  he  gets  really 
fighting  mad  in  the  interest  of  universal  peace. 

Meanwhile,  it  may  be  well  to  point  out  for 
financial  interests  the  benefit  to  oil  producers 
in  that  country  of  the  American  policy  to  date 
of  non-intervention  and  of  general  disorder. 

The  great  oil  gushers  of  Mexico  are  near  the 
coast.  They  are  thus  of  world-wide  value,  but 
there  is  no  storage  capacity  in  the  world  that 
might  not  be  quickly  exhausted  by  a full  run 
from  one  of  these  gushers.  The  Mexican  Petro- 
leum Company  has  storage  for  nine  million  bar- 
rels, and  it  is  full.  The  Cowdray  interests  like- 
wise are  full  up  to  their  six  million  storage 
capacity. 


nature’s  reserves 

Nature  is  wonderful  in  concealing  her  natural 
resources  until  the  world  is  prepared  for  them. 
Then  it  is  discovered  that  she  has  all  the  while 
been  hanging  out  invitation  signs  for  man  to  dig 
and  produce. 

To-day,  however,  the  world  can  see  and  scien- 
tifically figure  the  possibilities  of  both  coal  and 
oil  exhaustion  for  all  known  sources  of  supply 
on  this  planet. 


62 


THE  MEXICAN  PROBLEM 


When  petroleum  was  first  discovered  in  Penn- 
sylvania the  rivers  carried  it  to  waste.  Rocke- 
feller laid  the  foundation  for  the  biggest  fortune 
in  the  world  by  borrowing  money  to  store  oil 
when  oil  had  no  value  but  was  running  to 
waste. 

But  Rockefeller,  seeking  a new  stomach  to 
bear  up  the  burden  of  his  hundreds  of  millions, 
must  trust  to  “experts”  and  to  “expert”  reports 
on  Texas  and  Mexican  oils.  The  result  was  that 
Texas  oils  were  officially  condemned  by  the 
Standard  Oil  people  upon  expert  testimony  and 
the  oil  gushing  from  Spindle  Top  sold  be- 
low three  cents  a barrel,  with  few  people  having 
the  Rockefeller  courage  to  buy  storage  capacity 
for  it. 

The  popular  superstition  is  that  the  Standard 
Oil  interest  has  sought  to  grab  the  oil  wealth  of 
Mexico.  If  any  one,  however,  had  outside  keys 
to  26  Broadway,  he  could  find  therein  three 
successive  “expert”  reports  condemning  the 
early  samples  of  Mexican  oil  as  fakes. 

The  Standard  Oil  chemists  reported  that  the 
oil  sent  from  Mexico  could  not  be  nature’s  com- 
pound; somebody  was  attempting  to  impose 
upon  them  by  injecting  gasolene  and  sulphur 
into  worthless  bitumen  or  asphalt,  but  they 


THE  SHUT-IN  OIL  WELLS 


63 


had  not  been  chemically  combined  and  the  fraud 
was  easily  detectable. 

Mexican  asphaltum  had  no  value  and  Mexican 
oils  as  first  discovered  and  analyzed  were  largely 
Mexican  pitch  or  asphalt  and  were  officially 
declared  good  for  neither  kerosene  nor  gasolene. 
It  was  with  difficulty  that  the  railways  of  Mexico 
could  be  induced  to  change  their  engines  from 
high-priced  coal  to  cheap  Mexican  fuel  oil. 

THE  SHUT-IN  OIL  WELLS 

When  farther  south  the  gasolene  values  of 
Mexican  oils  were  proven,  the  compound  was 
shown  to  be  just  another  new  one  of  Mother 
Earth  with  the  gasolene  and  sulphur  more  de- 
tached. When  the  day  of  the  oil  gusher  arrived, 
one  can  only  conjecture  the  result  to  the  world 
had  there  been  tranquillity  in  Mexico  and  capital 
and  shipping  easily  available.  It  might  have 
been  the  story  over  again  of  “ten  thousand  tons 
of  gold”  to  be  dumped  into  the  ocean  to  save 
the  investment  base  of  the  world. 

To-day  there  is  a proven  daily  capacity  of 
one  million  barrels  of  oil  between  Tampico  and 
Mexico  City  and  there  are  neither  pipe  lines  nor 
ships  to  take  away  one-sixth  of  it.  A year’s  drill- 
ing would  multiply  the  present  drilled  capacity, 


64 


THE  MEXICAN  PROBLEM 


and  with  the  high  porosity  in  the  “reefs”  every 
oil  land  owner  would  have  to  quickly  drill  his 
boundaries  for  self-protection. 

A few  gushers  might  be  in  position  to  sell  their 
oil  to  a pipe  line  at  three  cents  a barrel  and  make 
a million  a year.  It  would  be  a wicked  world- 
waste.  The  Tampico  oil  fields  could  equal  the 
total  production  of  the  United  States  on  about 
forty -eight  hours’  notice  of  facilities  for  stor- 
ing the  product. 

But  Mexico,  politically  unsettled,  with  only 
two  pipe  lines  in  operation,  has  her  oil  wealth 
conserved,  and  Lord  Cowdray  can  report  to  the 
English  shareholders  of  the  Mexican  Eagle  Com- 
pany that  earnings  are  ten  million  dollars  per 
annum  Mexican  gold,  or  five  million  dollars  per 
annum  United  States  gold;  and  the  Mexican 
Petroleum  Company  can  report  to  its  American 
shareholders  net  earnings  of  about  the  same 
amount  — six  millions  for  the  $39,000,000  com- 
mon stock  the  past  year. 

THE  SHUT-IN  EAES 

Always  hoping  for  the  best,  I can  see  possible 
benefits  arising  from  the  “shut-in”  policy  for 
Mexico  — the  shutting-in  of  its  oil  wells  and  the 
shutting-in  of  the  ears  of  President  Wilson  to 


THE  SHUT-IN  EARS 


65 


all  appeals  for  help.  The  oil  forces  of  nature 
have  been  conserved  not  only  in  the  interest  of 
world  development  but  of  Mexico’s  slower  and 
more  substantial  progress. 

President  Wilson  has  so  turned  his  back  upon 
the  Mexican  situation  that  his  most  intimate 
political  advisers  will  not  mention  the  subject  of 
Mexico  in  his  presence.  His  mind  appears  to 
them  absolutely  closed  on  the  subject.  There  is 
no  “watchful  waiting”  policy  about  it.  That 
was  Mr.  Bryan’s  phrase  and  policy. 

When  one  looks  at  the  flaming  war  fires  in 
Europe,  he  may  see  a reason  or  a Providence  in 
the  Wilson  attitude  toward  Mexico. 

Mr.  Wilson  may  have  been  better  informed 
concerning  the  seriousness  of  the  European  sit- 
uation than  the  public  has  been  led  to  believe. 
The  people  who  have  had  his  confidence  on  this 
subject  have  not  had  his  confidence  as  respects 
Mexico,  and  it  may  be  well  doubted  if  any- 
body knowrs  exactly  Mr.  Wilson’s  real  position 
toward  our  suffering  neighbor  to  the  South. 

There  is  just  one  Aunerican  financial  interest 
with  millions  in  Mexico  that  is  in  thorough 
agreement  with  the'  W ilson  policy,  which  is  that 
of  new  s suppression  and  the  quieting  of  all  agita- 
tion concerning  Mexican  affairs.  But  I do  not 


66 


THE  MEXICAN  PROBLEM 


think  it  judicious  at  the  present  time  to  further 
enter  that  phase  of  the  subject. 

The  United  States  can  have  no  well-defined 
policy  toward  Mexico  the  public  announcement 
of  which  would  be  helpful  at  the  present  time.  It 
should  be  sufficient  for  one  to  reflect  that  the 
United  States  has  girded  on  its  armor  in  an 
Anglo-French  alliance,  the  end  of  which  cannot 
be  in  sight  while  either  two  of  these  three  great 
nations  remain  alive. 


CHAPTER  VII 


THE  LAW  OF  COMPENSATION 

The  problem  of  value  with  any  investment  is 
determined  according  to  the  aim  of  the  manage- 
ment, otherwise  the  soul  of  the  proprietor, 
owner,  or  manager. 

An  elephant  and  a jackass  were  born  on  the 
same  day  in  the  same  stable,  drank  from  the 
same  spring  of  water,  and  ate  from  the  same 
bale  of  hay.  At  the  end  of  several  years  every 
physical  fiber  of  each  had  come  from  the  same 
water  and  the  same  hay,  but  the  elephant  was 
still  more  of  an  elephant  and  the  jackass  more 
of  a jackass  — because  one  was  born  with  the 
soul  of  an  elephant  and  the  other  with  the  soul 
of  a jackass. 

One  of  my  newspaper  associates  was  recently 
en  route  from  Winnipeg  to  meet  me  in  Montreal. 

“What  did  you  learn?” 

He  replied:  “I  visited  all  the  smoking-cars 
en  route  to  mingle  with  the  people.  They  were 
jovial  and  light-hearted  in  the  third-class  smoker, 
but  in  the  first-class  smoker  sullen,  morose, 


68 


THE  MEXICAN  PROBLEM 


thoughtful.  I believe  that  of  all  my  friends  in 
Winnipeg  the  war  has  slain  four  out  of  five. 

“In  the  first-class  smoking  compartment  a 
Canadian  asked:  ‘What  is  the  compensation  to 
Canada  for  all  her  sacrifice?’ 

“And  a British  officer  growled,  ‘There  is  in 
this  world  no  compensation  in  sacrifice.’  ” 

“Did  you  refute  him?” 

“How  could  I,  with  eighty  per  cent  of  my 
friends  in  Winnipeg  dead  in  the  war  and  my  own 
memories  of  a struggle  when  as  a youth  of  ten 
to  protect  my  school-books,  snatched  from  my 
hand  by  a little  negro  girl,  I rolled  in  blood  and 
dirt,  for  she  buried  her  teeth  in  my  flesh  to  the 
cheek-bone,  and  I carry  the  scar  to-day?  What 
compensation  to  me  or  to  Canada?  ” 

I had  to  respond:  “I  have  never  forgotten  the 
slow,  solemn  words  of  Ralph  Waldo  Emerson  in 
the  Old  South  Meeting-House  at  Boston,  as  he 
drawled  forth:  ‘The  Sandwich  Islanders  have 
a proverb  that  the  strength  of  the  slain  enters 
into  the  arm  of  the  conqueror.’ 

“Was  your  arm  weakened  or  your  fighting 
soul  for  right  shrunken  by  your  youthful  com- 
bat? Did  I not  tell  you  two  years  ago  that  the 
war  had  rejuvenated  France  and  raised  in  her  a 
new  soul?  Is  she  not  to-day  the  proud  treasure 


CARTRIDGES  ARE  CURRENCY  69 


of  the  world?  There  are  many  rich  men  in  the 
United  States  who  would  like  to  swap  their 
money  and  position  with  the  men  of  England 
who  have  given  up  their  fortunes  in  defense  of 
their  country  but  have  found  their  souls. 

“The  sum  of  human  happiness  to-day  is 
greater  in  the  British  empire  united  and  at  war 
for  liberty  and  humanity  than  ever  before;  and 
it  will  increase  with  the  sacrifice.” 

Then  I went  down  into  Mexico  and  studied 
an  empire  of  natural  wealth  and  resources,  but 
a nation  that  has  never  yet  found  its  soul,  or  a 
flag  which  represents  service  to  humanity. 

CARTRIDGES  ARE  CURRENCY 

When  the  Mexican  soldier  finds  Carranza 
money  will  not  buy  food,  he  or  his  woman  takes 
the  government  cartridges  and  buys  their  provi- 
sions. Cartridges  are  currency  in  Mexico. 

Zapata  has  maintained  himself  supreme  in  his 
state  against  six  administrations  in  the  City  of 
Mexico  and  never  imported  arms  or  munitions. 
He  holds  a rich  territory,  the  food  of  which  can 
buy  the  arms  and  cartridges  of  his  opponents. 

Seventeen  million  people  on  the  richest  min- 
eral territory  of  the  world,  that  can  grow  any- 
thing in  the  world  and  produce  food  in  abun- 


70 


THE  MEXICAN  PROBLEM 


dance  every  month  of  the  year,  use  their  cart- 
ridges for  currency;  and  their  national  soul  can 
never  be  born  under  that  miserable  motto  of  self- 
interest,  “ Mexico  for  the  Mexicans,”  which 
means  Zapata  for  Zapata,  Carranza  for  Car- 
ranza, Pelaez  for  Pelaez,  Villa  for  Villa,  until 
every  part  is  for  itself  and  nobody  for  the  whole. 

Returning  north,  I find  Canada,  seven  mil- 
lion of  people,  on  a soil  that  works  only  three  or 
four  months  of  the  year,  sacrificing  state  and 
national  treasure  to  develop  national  transporta- 
tion, and  until  this  war  dependent  upon  foreign 
credit,  now  summoning  all  her  resources,  not  for 
Canada,  which  needs  no  defense,  but  for  civili- 
zation and  the  empire  of  which  she  is  a part; 
giving  more  than  four  hundred  thousand  of  her 
best  men  to  the  battle  line  and  over  a billion  of 
her  treasure  and  earnings  for  the  funds  of  war; 
and  men,  women,  and  children  working  every 
possible  hour  of  the  twenty-four. 

Mexico  is  still  seeking  compensation  for  some- 
thing she  never  knew  she  had  until  American 
enterprise  developed  it  and  with  it  lifted  her 
labor  toward  modern  civilization. 

Canada,  like  France  and  Britain,  has  found 
her  soul,  not  in  the  motto,  “Canada  for  the 
Canadians,”  but  in  Canada  for  world  defense. 


BARBECUE  WITH  AMERICANS  WAITING  ON  THE  MEXICANS 


OUR  CRIME  AGAINST  MEXICO  71 


Canada  is  young  but  has  the  soul  of  an  ele- 
phant. 

Mexico  will  never  be  for  the  Mexicans  or  for 
humanity  until  American  and  European  enter- 
prise has  had  fair  play  in  that  country  and  been 
permitted  to  pay  fair  wages  to  her  willing  people 
who  are  longing  for  light,  enlightenment,  and 
education.  Without  education  leading  to  useful- 
ness there  can  be  no  patriotism. 

OUR  CRIME  AGAINST  MEXICO 

Carranza  is  in  a difficult  situation.  We  of  the 
United  States  have  struck  down  all  credit  for 
Mexico. 

Had  we  deliberately  gone  about  a diabolical 
scheme  to  wreck  a billion  of  foreign  capital  in 
Mexico,  to  give  forty  thousand  foreigners  over 
to  plunder,  and  to  decree  misery,  poverty,  and 
sorrow  for  more  than  fifteen  million  Mexi- 
cans, we  could  have  conceived  of  no  more  effec- 
tive plan  than  that  which  we  have  executed 
toward  her  without  ever  planning  anything 
against  her. 

Because  the  Guggenheim  smelting  interests 
could  make  some  millions  of  dollars  more  a year 
with  peace  in  Mexico,  nobody  must  speak  a 
word  for  peace  in  Mexico,  for  the  Guggenheims 


72 


THE  MEXICAN  PROBLEM 


represent  capital  and  the  securities  of  their  com- 
panies are  in  Wall  Street.  Because  the  Standard 
Oil  people  with  peace  in  Mexico  might  build  pipe 
lines  therein  and  buy  Mexican  oil  and  make 
money  refining  it,  it  is  better  to  have  anarchy  in 
Mexico  than  that  the  Standard  Oil  Company 
should  have  any  more  capital,  wealth,  or  earn- 
ings. 

Therefore,  Mexico  must  be  cut  asunder,  Car- 
ranza must  rule  or  tumble  down  in  Mexico  City; 
Villa  may  overrun  Chihuahua  and  even  raid 
into  the  United  States;  Pelaez  may  govern  in 
the  oil  fields,  Felix  Diaz  may  operate  from  Vera 
Cruz,  Zapata  may  rule  to  the  south  of  Mexico 
City,  and  Cantu  may  run  Lower  California. 

If  we  had  meditated  a diabolical  plan  to  ruin 
Mexico,  and  all  the  friends  of  Mexico,  how  suc- 
cessful would  have  been  the  most  wicked  machi- 
nation if  it  could  have  accomplished  the  present 
disunited  and  hopeless  situation ! 

If  Mexico  had  been  permitted  to  be  truly  free 
by  an  assisting  hand  from  the  United  States, 
what  a power  to-day  would  be  her  food  and  min- 
eral resources  in  health  and  help  for  the  whole 
world! 

We  have  declared  ourselves  brother-keeper  of 
Mexico  and  have  imprisoned  her;  and  as  she 


THE  COMPENSATION  OF  LOOT  73 


tears  herself  within  her  own  prison  walls,  we  stuff 
cotton  in  our  ears  and  give  her  over  to  the  I.W.W 
and  the  crazy,  illogical  brains  of  such  as  Lincoln 
Steffens. 

With  many  of  the  richer  states  in  Mexico  cut 
off  from  support  to  the  central  de  facto  govern- 
ment, where  shall  Carranza  raise  revenue  to  pay 
his  soldiers  and  maintain  law  and  order? 

THE  COMPENSATION  OF  LOOT 

It  is  a mystery  to  everybody  in  and  out  of 
Mexico  how  Carranza  can  exist.  I have  very  re- 
liable reports  from  abroad  that  some  German 
money  has  come  into  his  hands.  Only  recently 
he  took  $38,000,000  Mexican  silver  from  the 
banks  in  Mexico  City,  and  it  was  figured  that 
this  would  last  him  only  so  many  weeks  and 
that  then  Villa  would  again  be  raiding  over  the 
country.  When  Carranza  has  troops  and  money. 
Villa  takes  to  the  hills,  but  when  the  money  is 
gone  and  his  soldiers  clamor  for  pay,  Villa  ap- 
pears on  the  scene  and  promises  the  compensa- 
tion of  loot;  and  our  Air.  Wilson  says  that  these 
good  patriots,  both  of  whom  have  been  his  allies, 
must  fight  it  out  as  did  our  forefathers. 

I wonder  if  Mr.  Wilson’s  forefathers  would 
really  have  sat  up  on  the  top  rail  of  a fence  and 


74 


THE  MEXICAN  PROBLEM 


cheered  on  the  Indian  tribes  against  the  Ameri- 
can pioneer  bringing  the  white  man’s  civilization 
into  the  jungle?  Would  they  have  called  out, 
“Bully  for  you,  old  Puritan,  over  goes  jTour 
meeting-house  and  some  children  in  the  flames! 
Buck  up  there,  old  Sioux,  there  are  more  scalps 
for  you!  more  women  to  torture!  more  fields  to 
burn!  more  plunder  ahead!  fight  it  out!” 

Now,  individual  reader,  please  don’t  blame 
Mr.  Wilson;  he  represents  you,  calloused  and 
hard  to  the  sufferings  of  your  neighbor,  rejoicing 
in  the  sacrifice  of  your  fathers  and  the  prosperity 
of  your  present  position.  You  have  not  and  you 
do  not  take  any  more  interest  in  Mexico  than 
you  do  in  a famine  in  India.  You  think  Mexico 
is  a good  joke  on  the  Guggenheims,  the  Standard 
Oil  Company,  and  Wall  Street,  but  when  a long 
war  in  Europe,  where  you  are  now  to  take  the 
forefront  of  the  battle,  has  softened  your  heart 
and  the  income  taxes  have  come  down  to  the 
smallest  savings,  you  will  be  less  of  an  Indian, 
less  of  a savage,  less  of  a Mexican,  yourself.  You 
will  be  more  thoughtful,  more  tender  of  heart, 
and  a more  worthy  son  of  the  men  who  first 
brought  freedom  and  true  democratic  govern- 
ment into  the  American  jungle. 

The  pity  about  it  all  is  that  Mexico  was 


THE  DIAZ  RECORD 


75 


brought  so  near  to  modern  civilization  under 
Diaz;  then  an  explosion  and  a political  and 
social  catastrophe,  the  like  of  which  no  man  in 
or  out  of  Mexico  had  ever  dreamed!  Yet  I don’t 
believe  there  were  ever  two  hundred  thousand 
men  under  arms  in  Mexico.  As  to  any  invasion 
by  the  Gringos,  there  were  never  fifty  thousand 
Americans  in  the  whole  of  Mexico,  and  to-day 
there  are  only  about  five  thousand. 

THE  DIAZ  RECORD 

I first  met  Porfirio  Diaz  nearly  forty  years  ago 
when  he  was  inviting  New  England  capital  into 
the  railroad  development  of  Mexico.  He  ruled 
Mexico  with  an  iron  hand  and  invited  the  capital 
of  the  world  into  its  development.  His  policy 
never  varied.  It  was  to  promote  in  Mexico  every 
enterprise  that  would  give  his  people  opportu- 
nity for  work,  wages,  and  education.  I have 
talked  with  all  interests  that  ever  had  to  deal 
with  him  and  I have  never  heard  a charge  that 
he  had  the  taint  of  graft  or  personal  ambition. 
Every  business  interest  that  ever  appealed  to 
him  for  support  found  him  fair  and  forceful  for 
the  right. 

I was  pleased  to  learn  on  this  trip  to  Mexico 
that  when  he  died,  an  exile  in  France,  he  was  not 


76 


THE  MEXICAN  PROBLEM 


the  absentee  ruler  with  treasured  or  hidden  mil- 
lions at  his  command.  He  left  seventy  million 
dollars  in  the  Mexican  government  treasury,  but 
died  a pauper,  as  befits  an  exiled  patriot;  and 
his  funeral  expenses  were  paid  by  sympathetic 
American  friends  who  still  hope  that  the  native 
blood  of  Mexico  will  produce  more  of  his  kind. 


CHAPTER  VIII 


THE  “EFFECTIVOS”  IN  MEXICO 

Neither  oil,  mineral  wealth,  nor  concentrated 
land  ownership  has  been  responsible  for  the 
break-up  in  Mexico.  Outside  capital  and  out- 
side engineers  built  first-class  steel  railroads 
throughout  Mexico,  opening  up  her  natural  re- 
sources to  the  world.  Talent  enough  in  Mexico 
has  been  developed  to  operate  them  with  fair 
efficiency  when  the  rifle  bullets  are  not  ringing 
over  the  rails. 

All  attempts  to  give  land  on  shares  or  in  fee 
simple  to  natives  who  would  cultivate  it  have 
been  failures.  The  mineral  resources  have  de- 
veloped a fine  middle-type  Mexican  labor,  com- 
petent to  run  stationary  engines  and  do  second- 
grade  engineering  work.  But  the  Mexicans  will 
not  work  well  under  their  own  countrymen. 
Whether  it  is  native  jealousy  or  desire  to  learn 
from  the  Anglo-Saxon  race,  or  whether  it  is  that 
innate  recognition,  universal  over  the  world,  of 
superior  leadership,  one  cannot  as  yet  clearly 
declare. 


78 


THE  MEXICAN  PROBLEM 


THE  MEN  WITH  THE  “SWING”  AND  THE  “BING” 

I was  surprised  at  the  high  type  of  Americans 
directing  affairs  in  the  oil  fields.  They  are  the 
big  fellows  of  the  physical  and  mental  stamp  of 
our  pioneer  western  railroad  builders.  They  love 
the  life,  the  climate,  the  excitement  and  the  op- 
portunity to  do  things  in  an  expansive  way. 
They  must  be  quick,  resourceful,  and  diplo- 
matic, and  they  are.  The  natives  admiringly 
call  them  the  “effectivos”  — the  people  who  do 
things. 

One  could  readily  see  that  Edward  L.  Doheny 
was  the  driving  force  of  the  Mexican  Petro- 
leum Company,  and  he  is  this  whether  on  the 
Atlantic  or  the  Pacific,  in  California  or  New 
York;  whether  planning  expansion  at  Tam- 
pico or  expressing  himself  forcefully  in  Mexico 
City. 

Later  I shall  write  of  this  remarkable  Amer- 
ican pioneer,  but  at  present  I wish  only  to 
say  that  he  and  John  D.  Rockefeller  share  in 
common  the  one  transcendent  quality  that 
makes  a business  strong  and  great.  It  is  said 
that  Rockefeller  in  his  judgment  of  men  never 
selects  a round  peg  for  a square  hole.  His  men 
always  fit  their  places.  In  this  respect  his  judg- 


THE  “SWING”  AND  THE  “BING”  79 


ment  is  almost  uncanny.  Doheny  shows  the 
same  remarkable  quality  in  his  selection  of  men. 
Is  there  a new  engineer  just  located  somewhere 
on  the  work:  Doheny  must  run  across  him,  ask  a 
couple  of  questions,  learn  the  correct  spelling  of 
his  name,  and  it  is  all  over  in  two  minutes.  He 
will  tell  General  Manager  Wylie  a little  later  the 
seven  qualifications  of  that  engineer  and  his  two 
deficiencies  which  are  to  be  watched. 

And  Wylie  is  the  man  with  the  “go”  and  the 
“swing”  and  the  “bing.”  He  inspires  and  fires 
the  whole  line.  His  eye  will  detect  a misplaced 
culvert  on  a railroad,  a small  leakage,  or  a large 
wastage.  He  knows  his  cost  sheets  in  detail;  but 
Doheny  knows  the  round  result  in  every  quarter. 
No  long  letters  and  no  correspondence  are 
wanted  by  these  head  men.  Results  only  are 
asked  for,  and  the  correspondence  is  telegraphic 
at  a cost  of  somewhere  between  ten  thousand 
and  twenty  thousand  dollars  a year. 

Americans  are  not  born  for  position;  they 
make  them.  The  ambitious  young  man  should 
seek  his  opportunity  near  the  left-hand  of  power. 
The  right-hand  man  of  Wylie  is  Paddleford,  but 
he  began  on  his  left  as  physician.  He  demanded 
activity  and  Wylie  sent  him  down  the  line  — 
“ Flick  is  the  boss  driller,  but  you  can  help  in 


80 


THE  MEXICAN  PROBLEM 


detailed  reports.”  The  result  was  Paddleford 
as  General  Superintendent,  building  railroads, 
pipes  lines,  and  pumping  stations. 

Captain  Green,  the  local  superintendent  at 
Tampico,  is  rightly  titled.  He  was  formerly  with 
our  army  in  the  Philippines,  where  he  mastered 
Spanish,  and,  therefore,  in  Mexico  he  can  talk 
two  languages  at  once  — polite  Spanish  to  the 
court  and  officials,  and  forceful  English  at  the 
same  time  to  the  men  under  him.  He  is  two 
hundred  and  fifty  pounds  of  effective  dynamite 
and  a jaw  that  means  fight  if  necessary. 

MINTING  OIL 

The  expanding  part  of  the  Mexican  Petroleum 
Company’s  property  at  the  present  time  is  the 
topping  plant  at  the  Tampico  terminal  of  the 
pipe  line,  said  to  be  the  largest  topping  plant  in 
the  world.  Smith,  at  the  head  of  it,  was  formerly 
with  the  Waters-Pierce  refinery.  He  is  several 
inches  over  six  feet  and  the  Mexicans  under  him 
look  like  children.  Of  the  more  than  fifty  thou- 
sand barrels  produced  daily  half  goes  through 
the  topping  plant,  which,  without  impairing  the 
value  of  the  oil  fuel,  takes  a half-dollar’s  worth  of 
gasolene  — wholesale  price  of  distillate  at  Tam- 
pico — right  out  of  the  crude  oil  barrel  and  at 


MINING  OR  REFINING 


81 


ninety  per  cent  profit.  This  plant  should  soon 
be  topping  all  the  oil  production.  It  is  better 
than  a gold  mine  so  long  as  gasolene  keeps  up 
in  price;  it  is  a mine  with  the  gold  minted  as  a 
by-product.  Yet  the  buyer  who  transports  it, 
further  refines  it  and  makes  distribution,  gets 
almost  as  much  more  out  of  it.  Doheny  believes 
in  division  as  the  proper  way  to  attain  results  in 
addition.  • \ 

Nevertheless,  the  Mexican  Petroleum  Com- 
pany is  completing  a two-million-dollar  refinery 
at  New  Orleans,  which  should  soon  be  in  opera- 
tion. 


MINING  OR  REFINING 

And,  speaking  of  oil  refining,  my  mind  is  still 
working  over  the  problem  of  where  the  wealth 
from  oil  in  the  future  is  to  be,  whether  from  the 
mining  or  the  refining  end. 

The  Standard  Oil  people,  operating  only  in 
American  territory  and  desiring  to  mine  only 
ten  or  fifteen  per  cent  of  the  oil  they  transport 
and  refine,  have  taken  in  dividends,  and  created 
in  value,  more  than  five  billion  dollars  from  the 
transportation,  refining,  and  marketing  of  oil. 
This  is  a sum  five  times  our  recent  national  debt. 
It  is  also  the  sum  of  the  cost  of  prosecuting  our 


82 


THE  MEXICAN  PROBLEM 


Civil  War.  It  would  dig  a dozen  Panama  Canals, 
and  it  represents  more  than  one-third  of  the 
values  that  legislation  has  permitted  to  remain 
in  the  entire  transportation  system  of  the  United 
States.  But  where  are  the  “Coal  Oil  Johnnies,” 
the  original  diggers  for  oil  and  their  early  mil- 
lions? 

The  Standard  Oil  Company  made  its  mil- 
lions where  millions  are  always  made,  in  material 
service  to  the  widest  number  of  consumers.  The 
“independent”  producer  in  the  United  States 
formerly  had  one  main  customer.  He  never  had 
half  a dozen  people  bidding  for  his  oil.  The  pro- 
ducer of  fuel  oil  to-day  has  the  world  for  his  cus- 
tomer so  far  as  he  can  reach  the  world  by  pipe 
lines  or  ships.  Still  his  customer  must  be  a refiner 
or  a fuel  oil  burner.  But  it  is  a wicked  waste  to- 
day to  burn  the  unrefined  crude  oil  from  any  oil 
field  in  the  world. 

A forty-two  gallon  barrel  of  crude  Mexican  oil 
is  worth  only  about  sixty  cents  on  the  Gulf  of 
Mexico.  Ten  per  cent  of  it  is  gasolene  and  there 
are  many  Mexican  oils  from  which  a good  deal 
more  than  ten  per  cent  in  gasolene  can  be  taken. 
In  the  topping  plant  at  Tampico  it  is  separated 
at  a cost  of  less  than  one  cent  a gallon  for  the 
gasolene,  and  the  wastage  in  handling  this  gallon 


SHIPPING 


83 


is  only  one-half  of  one  per  cent.  Gas  from  the  oil 
wells  heats  the  oil  to  a temperature  of  three 
hundred  and  twenty-five  degrees,  and  in  the 
condensation  the  gasolene  is  drawn  off.  Some 
contracts  with  the  Mexican  Petroleum  Com- 
pany have  run  below  sixty  cents,  but  the  average 
received  at  Tampico  for  a barrel  of  oil  can  be 
brought  up  to  above  ninety  cents  by  the  topping 
plant,  which,  when  finished  to  top  all  the  oil,  will 
have  cost  far  less  than  one  million  dollars.  Across 
the  river  the  Pierce  Oil  refinery  takes  in  crude 
oil  from  the  Mexican  Petroleum  Company  and 
gets  two  per  cent  in  beautiful  paraffin  cakes.  In 
all  there  are  thirty-five  commercial  products  in 
petroleum,  and  they  sub-divide  into  many  more 
commercial  uses. 

There  is  a great  future  for  Mexican  oil  in  the 
refining  business.  There  is  yet  more  money  now 
in  the  transportation  and  refining  and  merchan- 
dising of  Mexican  oil  than  there  is  in  the  value 
of  the  oil  itself  at  the  seaboard. 

SHIPPING 

The  Mexican  Petroleum  Company  has  put 
more  than  twenty  millions  in  cash  into  devel- 
opment within  Mexico,  and  with  its  majority 
owner,  the  Pan-American  Petroleum  & Trans- 


84 


THE  MEXICAN  PROBLEM 


port  Company,  will  soon  have  a like  sum  in 
shipping.  Building  plans  at  present  under  way 
will  round  out  a fleet  of  twenty-two  ships  with 
two  hundred  thousand  total  tonnage,  costing 
about  seventeen  million  dollars,  and  the  whole 
could  be  sold  to-day,  lock,  stock,  and  barrel, 
completed  and  uncompleted,  for  a good  deal 
more  than  thirty  million  dollars.  There  are,  be- 
sides, five  chartered  ships  abroad  promised  for 
the  close  of  the  war,  bringing  the  fleet  up  to 
twenty-seven  ships. 

The  Mexican  Petroleum  Company  does  not 
own  its  ocean-going  oil  carriers,  but  has  put  more 
than  three  million  dollars  into  refining  and 
storage  plants  in  the  United  States. 

Such  is  the  demand  for  ships  in  oil  transpor- 
tation that  the  Union  Oil  Company  of  Cali- 
fornia is  relieving  the  situation  by  filling  its 
South  American  contracts  at  Tampico  instead 
of  Southern  California,  as  the  Panama  Canal 
so  shortens  the  shipping  distance. 

DIVIDENDS 

The  demands  upon  the  Mexican  Petroleum 
Company  for  expansion,  for  increased  shipping 
facilities,  for  storage,  and  for  refining  are  so  tre- 
mendous that  in  my  judgment  the  stockholders 


DIVIDENDS 


85 


ought  to  be  fully  informed  of  the  rich  possibilities 
before  them  and  invited  to  forego  all  dividends 
until  these  can  be  declared  as  Standard  Oil  divi- 
dends have  always  been  declared  — from  over- 
flowing treasuries.  Money  in  oil  ships,  oil  refin- 
ing, and  oil  storage  facilities  will  in  the  end  return 
to  the  patient  holders  from  twenty-two  to  fifty 
per  cent  per  annum.  When  competition  in  trans- 
portation and  refining  has  lowered  this  return, 
Mexican  Petroleum  stockholders  should  take 
their  dividends.  Meanwhile,  the  profits  will  be 
added  to  the  value  of  the  shares.  There  is  only 
one  place  in  the  world  where  a gold  dollar  is 
worth  and  is  quotable  at  two  gold  dollars,  and 
that  is  in  the  treasury  of  a profitably  expanding 
company. 


CHAPTER  IX 


OIL  EXPANSION 

The  submarine,  the  aeroplane,  the  modern  war- 
ship, the  pleasure  automobile,  the  motor  truck 
and  the  oncoming  farm  tractor  are  all  possibili- 
ties from  petroleum  development. 

War  is  a tremendous  consumer  of  oil  and  gaso- 
lene and  is  drawing  down  the  stocks  of  oil  above 
ground  throughout  the  world.  War’s  demand 
has  doubled  the  retail  price  of  gasolene  this  side 
of  the  water  and  multiplied  it  three-  and  four- 
fold on  the  other  side,  where  it  is  permitted  to  be 
used  in  peaceful  pursuits  only  to  a limited  extent 
and  under  government  regulation. 

In  England  no  oil  is  permitted  to  lay  the 
dust  on  the  highways.  If  you  have  official  busi- 
ness, you  are  permitted  a limited  amount  of 
gasolene  at  seventy-five  cents  per  gallon.  It 
should  thus  be  measurably  clear  that  industrial 
development  from  oil  is  held  back  by  the  war. 
The  world  has  use,  outside  the  war  area,  for  all 
the  oil  that  can  be  produced  and  transported  for 
a long  time  after  the  arrival  of  peace. 

Nevertheless,  it  may  be  useful  to  note  a few 


NAVAL  OIL  DEVELOPMENTS 


87 


facts  concerning  naval  development  under  oil 
supplies,  because  such  development  opens  the 
way  to  tremendous  merchant  shipping  develop- 
ments from  oil  after  the  war.  Without  fuel  oil  the 
United  States  government  could  never  have  de- 
signed for  its  first  line  battle  cruisers  a boiler  in- 
stallation with  one  hundred  and  eighty  thou- 
sand horse-power. 

NAVAL  OIL  DEVELOPMENTS 

The  projected  battle  cruisers  of  the  United 
States  could  not  be  reproduced  if  required  to  use 
coal  nor  can  they  be  remodeled  for  burning  coal. 

One  of  the  modern  monster  war  cruisers  may 
use  fourteen  thousand  barrels  of  oil  in  twenty- 
four  hours.  Although  the  United  States  Navy 
is  now  using  but  a million  and  a half  barrels  per 
annum,  the  estimate  of  the  Navy  Department 
is  that  it  will  be  using  nearly  seven  million  bar- 
rels within  six  years.  It  was  declared  six  months 
ago  at  Westminster:  “If  we  could  describe  what 
the  recent  push  has  meant  in  the  way  of  petrol, 
it  would  stagger  Parliament.” 

Assistant  Secretary  of  Navy  Roosevelt  has 
declared:  “It  may  be  set  down  as  a definite  con- 
clusion that  the  navy  cannot  revert  to  coal- 
burning vessels.” 


88 


THE  MEXICAN  PROBLEM 


Fuel  oil  for  the  navy,  he  says,  has  given  in- 
creased speed  and  cruising  radius,  control  of 
smoke-screens,  reduced  fire-room  forces  by 
fifty-five  per  cent,  increased  the  efficiency  of 
refueling  at  sea  twenty-five  per  cent,  given  abil- 
ity to  sustain  maximum  speed  for  long  periods 
of  time  without  clogging  the  furnaces,  flexi- 
bility in  speed,  and  finally  greater  safety  from 
submarines,  as  in  modern  American  ships  the 
fuel  oil  is  disposed  along  the  bottom  to  cushion 
the  blow  of  exploding  torpedoes. 

Considering  this  subject,  the  L'nited  States 
naval  consulting  board  has  reported  that  “the 
Mexican  oil  fields  are  probably  the  most  ex- 
tensive deposit  of  oil  anywhere  in  the  western 
hemisphere,  if  not  in  the  world.  To-day  Great 
Britain  renews  her  oil  fuel  from  Mexico,  and  is 
assured  thereof  only  so  long  as  she  maintains 
undisputed  control  of  the  seas.” 

OIL  STATIONS  FOR  SHIPS 

Some  economists  and  financiers  figure  that 
the  development  of  the  oil  industry  is  measur- 
ably dependent  upon  the  development  of  oil 
supply  stations  throughout  the  world,  notably 
at  the  great  shipping  ports. 

You  may  contract  in  London  for  annual  sup- 


TWO  BRITISH  DESTROYERS  — ONE  RUNNING  ON  COAL,  THE  OTHER  ON  OIL 


EXPANSION  IN  MEXICO 


89 


plies  of  coal  at  any  shipping  port  in  the  world, 
and  the  price  before  the  war  was  not  far  from 
five  dollars  per  ton. 

Coincident  with  the  building  of  Diesel  engine 
ships  must  be  the  establishment  of  oil  supply 
stations  around  the  globe,  so  that  steamship 
owners  and  shipping  agents  may  contract  for 
oil  supplies  as  they  now  contract  for  coal. 

The  Daniels  idea  of  an  oil  base  in  California 
for  the  United  States  is  an  absurdity.  What  is 
wanted  for  our  navy  is  American  commercial  oil 
stations.  No  navy  can  use  oil  in  amount  com- 
parable with  the  uses  of  commerce,  and  only 
commerce  can  sustain  oil  stations  around  the 
globe. 


EXPANSION  IN  MEXICO 

Before  the  European  war  the  eyes  of  the  world 
outside  of  the  United  States  were  focused  upon 
the  Panama  Canal  and  the  nearest  oil  base 
thereto  for  ships. 

The  United  States  has  officially  opened  its 
eyes  a bit  to  the  question  of  oil  for  its  naval 
ships,  and  not  long  ago  appropriated  sixty  thou- 
sand dollars  to  investigate  fuel  oil  and  gasolene 
for  naval  requirements  and  naval  storage;  but 
while  the  United  States  now  is,  and  has  been 


90 


THE  MEXICAN  PROBLEM 


from  the  beginning,  the  biggest  oil  producer  in 
the  world,  nobody  seems  to  have  taken  the 
slightest  interest  in  building  up  a mercantile 
marine  for  the  United  States  on  the  basis  of  the 
cheapest  and  largest  oil  supplies  on  our  side  of 
both  oceans. 

While  the  British  government  announces  in 
Parliament  that  its  mercantile  shipping  is  within 
five  or  ten  per  cent  of  what  it  was  at  the  begin- 
ning of  the  war,  except  so  far  as  it  is  comman- 
deered for  war  service,  and  at  the  same  time 
declares  that  its  naval  forces  are  so  rapidly  ex- 
panding that  at  the  close  of  this  war  it  will  have 
a tonnage  equaling  the  entire  naval  tonnage  of 
the  rest  of  the  world,  it  is  not  unmindful  of  the 
future  in  its  mercantile  shipping,  especially  in 
relation  to  improvements  and  developments  in 
connection  with  oil  supplies. 

While  the  British  navy  is  probably  taking 
twenty  thousand  barrels  a day  from  the  Mexi- 
can Eagle  Company,  a British  steamship  com- 
pany is  negotiating  with  the  Mexican  Petroleum 
Company  for  a very  considerable  part  of  its 
production  in  the  future. 

The  Mexican  Petroleum  Company  may  elect 
to  deliver  the  oil  at  Tampico  or  elsewhere 
around  the  world  on  six  months’  notice.  Of 


EXPANDING  SHIPMENTS 


91 


course  no  producing  company  would  now  con- 
tract to  ship  around  the  world.  When  peace 
relieves  the  shipping  situation,  the  development 
in  oil  shipping  and  in  fuel  oil  ships  will  be  tre- 
mendous. 


EXPANDING  SHIPMENTS 

The  Pan-American  Company  now  has  twelve 
steamers  working  for  the  Mexican  Petroleum 
Company,  and  nine  more  are  due  this  year. 
Six  should  be  delivered  this  summer  and  ten 
thousand  tons  a month  should  be  steadily  added 
to  the  company’s  shipping  facilities.  Three 
ships  aggregating  thirty -two  thousand  tons  are 
due  next  year. 

The  Union  Oil  Company  has  seven  steamers 
taking  Mexican  Petroleum  Company  oil  through 
the  Panama  Canal  to  South  America,  and  the 
Standard  Oil  Company  of  New  Jersey  has  five 
ships  taking  its  oil  north. 

In  1916  the  Mexican  Petroleum  Company 
produced  12,400,000  barrels  of  oil  and  sold 
10,600,000  for  $8,825,000,  or  a little  above 
eighty-three  cents  per  barrel.  The  cost,  includ- 
ing bond  interest,  taxes,  and  depreciation,  was 
twenty-five  cents  per  barrel.  The  production 
for  1917  should  equal  fifty  thousand  barrels  a 


92 


THE  MEXICAN  PROBLEM 


day,  or  18,250,000  barrels  and  it  should  realize 
not  far  from  one  dollar  per  barrel. 

If  I were  writing  a financial  article,  I should 
immediately  figure  that,  deducting  the  interest 
on  Mexican  Petroleum  eight  per  cent  preferred 
stock,  there  should  remain  for  the  $40,000,000 
Mexican  Petroleum  common  stock,  and  United 
States  government  war  taxes,  not  far  from 
thirty  per  cent ; but  as  I am  not  writing  a finan- 
cial article,  but  on  the  Mexican  situation  in  gen- 
eral, I give  the  following  as  the  best  estimate  I 
could  get  in  Tampico  of  the  probable  movement 
of  Mexican  Petroleum  Company’s  oil  in  1917 : — 

4.000. 000  barrels  to  South  America  by  the  Union 

Oil  Company. 

3.000. 000  barrels  into  New  England. 

3.000. 000  barrels  to  the  Standard  Oil  Company  of 

New  Jersey. 

2,500,000  barrels  to  the  Magnolia  Oil  Company  (a 
Standard  Oil  subsidiary  in  Texas). 

2.000. 000  barrels  to  New  Orleans  and  Florida. 

2.000. 000  barrels  to  the  Atlantic  Refining  Company. 

1.000. 000  barrels  to  the  Prudential  Company. 

1,000,000  barrels  in  “tops.” 

I give  the  above  table  to  show  the  wide  dis- 
tribution of  this  expanding  company,  whose 
production  is,  in  my  judgment,  only  in  its  be- 
ginnings. 


EXPANDING  SHIPMENTS 


93 


The  contracts  for  the  “tops”  or  distillate  call 
for  barrels  of  fifty-gallon  capacity. 

To  date  the  Mexican  Petroleum  Company  has 
produced  about  eighty  million  barrels  of  oil,  of 
which  more  than  fifty-five  million  barrels  have 
come  from  the  Casiano  well  at  a pressure  of 
twro  hundred  and  sixty-five  pounds  and  with 
the  valve  unchanged  during  the  seven  years  of 
its  operation  and  the  pressure  undiminished  — 
and  Cerro  Azul  is  younger  and  greater,  but  can 
be  more  closely  shut  in. 


CHAPTER  X 


PIONEER  WORK  FINISHED 

Tiie  expansion  of  the  Mexican  Petroleum  Com- 
pany in  its  beginnings  was  by  land  acquisition. 
Such  expansion  may  now  be  considered  as 
ended.  Some  people  figure  that  more  than 
three-quarters  of  the  oil  values  in  this  Mexican 
field  are  under  the  Mexican  Petroleum  Com- 
pany’s six  hundred  and  twenty  thousand  acres 
and  that  they  represent  a potentiality  of  at 
least  five  billion  barrels  in  production,  a sum 
ten  times  the  world’s  annual  consumption.  But 
no  man  can  set  limits  or  boundaries  upon  this 
oil  territory. 

Doheny  truthfully  says,  “Geology  is  a joke 
in  Mexico;  values  are  where  you  find  them.  . . 
And  Doheny  has  led  in  finding  values  both  in 
California  and  Mexico. 

His  first  purchases  in  Mexico  were  in  August, 
1900,  although  prospecting  was  begun  by  Do- 
heny and  Canfield  in  the  May  and  June  pre- 
ceding. They  were  American  pioneer  inventors 
and  soon  found  a cheaper  method  of  prospect- 


EXPANDING  ENGINEERING 


95 


ing  than  in  crawling  and  cutting  their  way 
through  the  jungle.  They  announced  they 
would  pay  five  pesos  to  anybody  pointing  out 
the  location  of  “tar  spots.”  They  were  inun- 
dated with  “tar  spots”  and  readily  took  leases 
on  thousands  of  acres.  So  pressing  were  the 
Mexicans  to  realize  money  that  royalties  were 
sometimes  paid  several  years  in  advance,  and 
when  they  would  no  longer  pay  extended  ad- 
vance royalties,  titles  were  forced  upon  them. 

EXPANDING  ENGINEERING 

The  same  forces  that  engineered  the  construc- 
tion are  still  engineering  the  company’s  expan- 
sion in  and  out  of  Mexico.  How  successful  this 
engineering  has  been  to  date  may  be  illustrated 
by  the  fact  that  Manager  Wylie  estimated  for 
the  first  eight-inch  pipe  line  a capacity  of  twelve 
thousand  five  hundred  barrels  a day,  with 
pumping  stations  twenty  miles  apart.  By  put- 
ting the  pumping  stations  fourteen  miles  apart, 
the  pipe  line  capacity  was  advanced  to  twenty 
thousand  barrels  a day;  then  the  pumping  sta- 
tions were  improved  and  the  oil  was  a little  thin- 
ner than  expected  and  the  eight-inch  pipe  line 
was  soon  carrying  thirty-five  thousand  barrels  a 
day.  But  improvements  and  expansion  continued. 


96 


THE  MEXICAN  PROBLEM 


Now  the  two  pipe  lines  carrying  oil  are  de- 
livering seventy-five  thousand  barrels  a day 
at  the  Tampico  terminal,  and  sixty  thousand 
barrels  a day  are  being  exported,  along  with 
more  than  one  hundred  thousand  barrels  of 
gasolene  per  month.  Orders  have  just  been 
given  to  burn  oil  at  the  pumping  stations  and 
the  topping  plant,  releasing  the  third  pipe  line, 
which  is  now  used  as  a gas  line,  so  that  it  can 
be  used  to  transport  oil.  This  may  bring  the 
company’s  capacity  for  delivery  at  Tampico  to 
above  one  hundred  thousand  barrels  per  day. 

The  engineering  enterprise  in  the  Mexican 
Petroleum  Company  resembles  the  history  of 
our  western  railroad  pioneers,  who  laid  their 
rails  on  the  prairies  in  advance  of  the  settlers. 
The  Mexican  Petroleum  people  actually  had 
the  audacity  to  build  railroads  and  pipe  lines 
in  advance  of  their  wells  and  upon  the  basis 
only  of  the  oil  seepages. 

A million  and  a half  dollars  went  into  the 
first  pipe  line  and  two  million  and  a half  dollars 
into  the  railroad  and  pipe  lines  to  Cerro  Azul, 
all  in  advance  of  any  oil  well. 

When  the  great  Casiano  well  came  in,  Sep- 
tember 11,  1910,  a million  and  a half  barrels  of 
oil  had  to  be  burned  to  keep  it  from  the  rivers. 


PEON  HOUSES  BEFORE  OIL  DEVELOPMENT  BEGAN 


EXPANDING  ENGINEERING 


97 


where  it  might  have  done  incalculable  damage, 
but  the  company’s  engineering  forces  put  up 
fifty-five  thousand  barrel  tanks  at  the  rate  of 
one  every  four  and  a half  days.  Last  year  Cerro 
Azul  shot  a million  and  a half  barrels  into  the 
air  before  it  could  be  controlled.  But  here  again 
the  company’s  forces  saved,  by  earth  dams, 
more  than  half  of  this,  and  then  for  safety 
burned  the  overflow.  There  is  no  evidence  as 
to  the  number  of  oil  gushers  that  may  burst 
forth  in  the  future,  but  knowledge  of  how  to 
handle  them  has  increased. 

And  speaking  of  the  standard  fifty-five-thou- 
sand-barrel steel  oil  tanks,  the  reader  may  be  in- 
terested to  know  that  they  are  thirty  feet  high 
and  one  hundred  and  fifteen  feet  in  diameter, 
are  usually  surrounded  by  an  earth  dam  to  save 
the  oil  in  case  of  accident,  and  have  usually  a 
bottom  valve  through  which  the  oil  may  be 
drawn  off  if  a bolt  of  lightning  fires  the  tank. 

The  Mexican  Petroleum  Company  on  its 
thousand  acres  of  ground  at  “Tankville”  and  at 
its  Tampico  terminal  has  one  hundred  and  three 
of  these  tanks,  but  the  eye  will  meet  them  at 
almost  any  railroad  shipping  point  in  the  United 
States. 

The  first  complete  monthly  shipments  were 


98 


THE  MEXICAN  PROBLEM 


in  January,  1913,  when  two  hundred  and  forty- 
seven  thousand  barrels  left  the  wharf  at  Tam- 
pico. By  October,  1916,  the  shipments  had 
reached  eight  hundred  and  ten  thousand  barrels. 
Now  they  are  above  a million  and  a half  barrels 
a month. 

PIPE  LINES,  RAILROADS,  MOTOR  WAYS,  AND 
WATERWAYS 

This  American  concern  has  nearly  half  the 
pipe-line  mileage  in  the  country.  It  has  three 
eight-inch  pipe  lines  from  Tampico  to  the 
Casiano  well,  sixty-five  miles  distant.  Thence 
two  eight-inch  lines  to  Cerro  Azul,  twenty-two 
miles,  and  an  eighteen-mile  line  to  Tres  Her- 
manos,  a total  of  two  hundred  and  sixty-four 
miles.  The  oil  is  kept  moving  by  seven  pump- 
ing stations  operated  by  gas  from  a line  to  the 
Casiano  well,  but  the  stations  are  equipped  with 
oil-burning  apparatus,  now  to  be  put  in  com- 
mission as  already  noted  above.  The  oil  gushes 
at  such  a temperature  that  it  flows  without 
reheating. 

There  are  one  hundred  and  nineteen  miles  of 
four-  and  six-inch  water  mains,  and  the  com- 
pany is  opening  other  water  supplies. 

Over  these  lines,  well  buried  in  the  earth,  runs 


PIPE  LINES  AND  RAILROADS 


99 


the  company’s  fenced-in  private  motor  road, 
for  eighty  miles,  with  surveyed  right  of  way  to 
the  Tuxpan  River,  one  hundred  and  twenty- 
five  miles  in  all. 

There  is  no  speed  limit  on  a private  line  and 
the  company’s  officials  claim  their  trucks  and 
motors  do  business  over  this  road  cheaper  than 
the  business  could  be  handled  on  a railway;  but 
be  it  remembered  this  company  makes  its  own 
gasolene  of  sixty-three  specific  gravity,  at  a cost 
of  less  than  a cent  a gallon. 

The  company  also  parallels  this  highway  most 
of  the  distance,  or  to  San  Geronimo,  by  its  own 
motor  boat  line  and  water  route.  From  San 
Geronimo  south  it  operates  a thirty-five  mile 
railroad  to  Cerro  Azul,  and  has  nineteen  miles 
further  surveyed  for  construction.  It  has  also 
five  miles  of  standard  gauge  road  at  Ebano;  but 
not  a passenger  coach  on  any  line.  It  is  all  busi- 
ness. The  pleasurable  way  of  travel  in  this 
country  is  by  the  company’s  motor  boats,  for 
it  has  a very  complete  line  of  marine  equipment, 
including  the  yacht  Casiana,  usually  at  hand 
to  take  out  all  Americans  when  so  ordered  by 
the  United  States  or  Mexican  de  facto  govern- 
ments. 

The  company  has  been  as  far-sighted  and 


100 


THE  MEXICAN  PROBLEM 


ahead  of  its  rivals  in  its  Tampico  terminals  as 
in  its  oil  land  acquisitions.  In  tanks,  storage, 
river-frontage  shops,  machinery,  and  loading 
equipment  it  holds  the  ground  and  leadership. 
I figure  it  has  more  oil  in  pipe  lines  and  storage 
than  it  sold  last  year,  and  perhaps  as  much  as 
its  1916  production  — twelve  million  four  hun- 
dred thousand  barrels. 

The  great  pioneer  work  of  acquisition,  pro- 
duction, construction,  finance,  and  organization 
has  been  accomplished  in  seventeen  years,  and 
the  patient  owner  should  reap  handsome  re- 
wards in  the  next  seventeen  years. 

A CAUTION 

But  there  is  one  caution  I may  give  him,  and 
that  is  not  to  be  alarmed  concerning  reports 
from  Mexico  and  Tampico,  whence  there  is 
very  little  reliable  news  in  the  despatches  of 
the  day.  Indeed,  the  two  worst  informed  coun- 
tries concerning  each  other’s  affairs  are  those 
countries  lying  either  side  of  the  Rio  Grande. 

The  American  hears  little  that  is  good  or  true 
concerning  Mexico,  and  the  Mexican  hears  little 
that  is  good  or  true  concerning  the  United 
States.  The  governments  of  both  countries 
seem  equally  interested  in  suppressing  the  real 


RESIDENCES  OF  PEONS 


A CAUTION 


101 


news.  All  the  foreigners  interested  in  Mexico 
and  its  development  are  afraid  to  speak  con- 
cerning their  properties  or  their  operations  for 
fear  of  misconstruction  either  at  Washington 
or  Mexico  City,  and  harmless,  inane,  or  weakly 
stupid  news  reports  are  allowed  to  pass  censor- 
ship. We  have  all  sorts  of  “frightful”  German 
reports;  now  it  is  Villa  moving  on  Tampico  and, 
as  I write,  comes  the  report  that  shipping  is 
tied  up  at  Tampico  by  a strike  of  oil  handlers. 
One  would  think,  to  read  the  press  reports,  that 
there  was  a similarity  between  the  work  of  long- 
shoremen loading  ships  in  New  York  harbor 
and  thousands  of  Mexicans  loading  oil  ships  at 
Tampico. 

I stood  at  the  loading-station  on  the  east  side 
of  the  Panuco  River  at  the  Mexican  Petroleum 
Company’s  terminal  opposite  Tampico  and  wit- 
nessed one  of  the  big  oil  ships  slowly  draw  up 
to  the  wharf  for  its  load  of  oil.  There  must  have 
been  a very  large  party  on  the  pier,  for  it  con- 
sisted of  myself,  two  Mexicans,  and  Dr.  W.  W. 
Hills  and  his  wife.  The  doctor  was  explaining 
to  me  his  remedies  for  resuscitating  the  men  at 
Cerro  Azul  when  in  the  fumes  of  that  gusher 
the  American  engineers  were  working  day  and 
night  to  shut  in  the  torrent  of  oil,  — how  as  fast 


102 


THE  MEXICAN  PROBLEM 


as  a man  began  to  stagger  he  was  grabbed  by 
the  doctor’s  assistants  and  cjuickly  dragged  away 
from  the  well  so  that  the  doctor  might  promptly 
restore  him  by  gas  antidotes,  — and  before  he 
had  finished  his  explanation  the  two  Mexicans 
had  moved  a giant  hose  to  the  ship’s  side  and 
the  ship  was  being  filled  by  gravity  from  a tank 
on  the  hill,  some  fifteen  hundred  feet  away. 
The  next  day  the  ship  departed  with  her  sixty- 
five-thousand-barrel  load. 

But  what  is  the  poor  newsman  to  do  with  a 
press  report  when  it  arrives.  It  may  or  may 
not  be  true.  In  this  case  there  was  no  strike  of 
oil  ship  loaders,  but  for  a few  days  there  was 
trouble  and  a labor  strike  at  the  Pierce  Oil  re- 
finery and  at  the  Mexican  Eagle  refinery,  but 
the  true  news  could  not  be  given.  Now,  if  you 
were  a newsman  on  the  firing  line,  would  you 
send  forth  a report,  if  permitted,  indicating  de- 
lays in  some  oil  shipments  from  Tampico,  or 
would  you  wait  till  order  had  been  restored,  the 
censorship  lifted  and  then  telegraph  a history  of 
no  value? 


NORMAL  DISORDER 

The  point,  however,  I wish  to  make  for  in- 
vestment interests  should  be  clear.  Mexico  as 


NORMAL  DISORDER 


103 


a country  is  not  in  a state  of  normal  peace,  but 
of  normal  disorder— disorder  that  lias  prevailed 
more  or  less  for  a hundred  years,  except  during 
the  reign  of  Porfirio  Diaz.  Correct  news  reports 
are  not  readily  available,  and  the  business  in- 
vestor should  know  his  risks,  should  understand 
that  he  cannot  be  guided  by  newspaper  reports, 
and  should  fully  understand  that  Mexican  values 
are  selling  at  large  discounts  in  the  world  mar- 
kets, but  that  in  the  end  they  will  be  properly 
demonstrated  and  properly  protected  by  Ameri- 
can or  European  interests,  and  will  some  day 
be  properly  quoted. 


CHAPTER  XI 


WHY  THE  PAN-AMERICAN  COMPANY  CONTROLS 
MEXICAN  PETROLEUM 

American  financial  interests  are  now  more 
keenly  alive  than  ever  before  as  respects  their 
responsibilities  toward  investors.  The  opening- 
up  in  Alaska  of  the  greatest  copper  bonanza  the 
world  has  ever  seen  sent  Kennecott  Copper 
mining  shares  into  the  fifties  and  made  a wide 
distribution.  J.  P.  Morgan  & Company  and  their 
associates  might  have  been  tempted  to  dispose 
of  all  their  shares  to  the  public  and  let  the  public 
take  the  risk  of  a continuation  of  the  bonanza 
ore,  which  could  be  mined  and  marketed  at  less 
than  five  cents  per  pound  when  it  was  being  sold 
at  above  twenty-five  cents  a pound. 

Morgan  & Company,  however,  realized  their 
responsibilities  and  sought  insurance  for  Kenne- 
cott’s  future  by  acquisition  of  the  Braden  Copper 
mines  of  South  America,  which,  when  developed, 
will  insure  a large  copper  output  at  low  cost,  and 
also  by  acquisition  of  more  than  one-third  of  the 
shares  of  the  Utah  Copper  Company,  the  world’s 


CONTROL  OF  MEXICAN  PETROLEUM  105 


greatest  copper  mine,  whether  measured  by  out- 
put or  by  earnings.  It  is  no  longer  considered 
sound  American  finance  for  shareholders  as 
partners  to  run  away  from  each  other,  especially 
when  the  partners  are  the  managing  owners. 

The  Mexican  Petroleum  Company  has  a bo- 
nanza in  Mexico,  the  life  of  which  no  man  can 
limit,  but  insurance  of  property  in  Mexico,  and 
especially  insurance  of  stability  in  political, 
social,  and  government  conditions  would  carry 
a high  premium  rate. 

Mr.  Doheny  believed  the  best  way  to  attain 
the  desired  insurance  for  an  investment  future 
for  his  associated  interests  in  Mexican  Petro- 
leum was  to  merge  the  control  of  the  company 
in  a new  organization,  which  could  open  up  a 
broad  base  of  oil  production  in  California  and 
supply  ships  and  shipping  facilities  for  both 
California  and  Mexican  oil  around  the  world. 

It  was  also  in  contemplation  at  the  time  the 
Pan-American  Company  was  organized  to  make 
combination  with  other  oil  companies  that  their 
oil  distribution  might  be  combined.  At  present, 
however,  the  proposed  union  with  the  Union 
Oil  Company,  the  Associated  Oil  Company,  and 
other  oil  interests  has  been  laid  on  the  shelf,  and 
the  Pan-American  Company  has  started  a very 


106 


THE  MEXICAN  PROBLEM 


extensive  development  in  California,  opening  up 
two  big  properties  there,  the  Bell  Ranch  of 
ten  thousand  acres  and  the  Ojai  Ranch  of  eight 
thousand  acres. 

THE  INVESTMENT  BASE 

While  the  Mexican  Petroleum  Company  has 
$12,000,000  non-cumulative  eight  per  cent  pre- 
ferred stock,  about  $40,000,000  of  common 
stock,  and  about  $4,000,000  of  bonded  indebted- 
ness, the  Pan-American  Petroleum  & Transport 
Company  is  organized  with  a large  outline  for 
expansion  as  occasion  warrants. 

It  has  outstanding  $10,500,000  seven  per  cent 
preferred  stock,  convertible  into  common  at  the 
rate  of  $115  par  value  for  $100  par  value  of  com- 
mon stock,  but  the  amount  of  authorized  pre- 
ferred stock  is  $25,000,000.  It  has  an  authorized 
common  stock  (par  $50)  of  $125,000,000,  but  at 
present  there  is  outstanding  only  $30,494,750. 

The  Pan-American  Company  is  the  part  of 
the  enterprise  expanding  by  ocean  transporta- 
tion, California  development,  etc.,  and  has  in  its 
treasury  seventy-five  per  cent  of  the  eight  per 
cent  preferred  stock  of  the  Mexican  Petroleum 
Company  and  forty-five  per  cent  of  the  Mexican 
Petroleum  Company’s  common  stock. 


THE  PAN-AMERICAN  IN  CALIFORNIA  107 


With  its  shipping  interests  it  is  in  position  to 
pay  dividends  upon  its  common  stock  without 
waiting  for  dividends  upon  Mexican  Petroleum 
common.  It  will  thus  be  seen  that  the  invest- 
ment basis  in  this  combined  oil  enterprise  is  in 
Pan-American  and  the  speculation  is  in  Mexican 
Petroleum.  Indeed,  it  is  figured  that  for  Mexi- 
can Petroleum  to  pay  more  dividends  than  Pan- 
American,  Pan-American  must  first  pay  sixteen 
per  cent,  or  eight  dollars  upon  its  fifty-dollar 
shares.  There  is  present  expectation  that  Pan- 
American  will  begin  dividends  upon  its  common 
stock  this  year.  The  Pan-American  Company 
has  three  sources  of  revenue  and  the  Mexican 
Petroleum  Company  substantially  one. 

THE  PAN-AMERICAN  COMPANY  IN  CALIFORNIA 

In  southern  California  gasolene  is  used  with 
great  liberality.  The  broad  state  highways  and 
asphaltum  roads  invite  it.  To  visit  the  Bell 
Ranch  of  the  Pan-American  Company  I took  a 
little  motor  trip  of  two  hundred  and  sixty-five 
miles,  going  from  Los  Angeles  to  Los  Alamos, 
which  is  on  the  Bell  Ranch  property,  and  back 
to  Santa  Barbara  in  a day.  I learned  that  four- 
hundred-mile  motor  trips  for  a single  day  were 
not  uncommon  in  southern  California.  The 


108 


THE  MEXICAN  PROBLEM 


ladies  think  nothing  of  going  fifty  or  one  hun- 
dred miles  as  a morning  drive  for  a distant  noon 
luncheon. 

Doheny  bought  the  Bell  Ranch  for  $1,800,000 
and  turned  it  over  to  the  Pan-American  Com- 
pany. Boston  people  previously  had  an  option 
on  two  thousand  acres  of  this  property  at  $1660 
per  acre  and  forfeited  on  it.  Doheny  bought  the 
whole  for  less  than  the  previous  price  of  a part. 
This  was  the  largest  untouched  oil  property 
in  the  State  of  California.  Derricks  are  being 
erected  here  one  thousand  feet  apart,  or  one  der- 
rick to  twenty-five  acres.  There  are  known  to  be 
four  thousand  acres  of  oil  lands  in  the  property 
and  oil  has  been  proven  the  full  width  at  one  end. 
The  balance  has  not  yet  been  proven.  The  whole 
is  two  and  a half  to  three  miles  wide  and  seven 
and  a half  to  eight  and  a quarter  miles  long. 
The  Union  Oil  Company  is  on  the  west,  the 
Standard  Oil  Company  on  the  east,  and  on  the 
north  the  Palmer  Union  brought  in  a fifteen- 
thousand-barrel  gusher,  for  which,  of  course, 
they  were  unprepared,  as  gushers  in  California 
are  not  common.  They  shut  it  in  and  later  found 
that  it  had  departed  as  a gusher.  Most  of  the 
California  oil  is  obtained  by  pumping.  It  is 
expected  that  the  wells  here  will  do  two  hundred 


CALIFORNIA  OIL  STATISTICS  109 


barrels  a day.  Number  3 well  was  visited,  which 
is  down  twenty-nine  hundred  feet  and  is  doing 
one  hundred  and  fifty  barrels  a day.  Eleven 
derricks  have  been  started.  Oil  sands  here  have 
about  fourteen  per  cent  porosity.  The  Union 
Oil  Company  pays  eighty-five  cents  per  barrel 
on  the  ground  for  oil  and  takes  it  into  its  own 
pipe  line. 

SOME  CALIFORNIA  OIL  STATISTICS 

The  cost  of  a well  and  equipment  here  is  fig- 
ured at  fifteen  thousand  dollars,  and  at  present 
prices  for  oil  it  may  net  forty-five  thousand 
dollars  the  first  year.  Figures  have  been  made 
that  show  possibilities  of  four  hundred  wells 
drilled  on  this  property  in  two  years  to  cost  six 
million  dollars,  but  to  earn  three  times  this  sum 
per  annum.  This  would  be  more  wells  than  were 
ever  drilled  on  any  one  property  in  the  State. 

The  Ojai  Ranch,  several  miles  farther  south, 
cost  about  seven  hundred  and  fifty  thousand 
dollars.  Oil  was  discovered  in  California  in  1859, 
and  Thomas  A.  Scott,  of  the  Pennsylvania  Rail- 
road, was  interested  in  this  property  about  1865, 
but  he  was  looking  for  kerosene,  and  the  heavy 
oil  found  here  was  not  then  of  value.  Scott  was 
interested  in  the  first  projected  railroad  from 


110 


THE  MEXICAN  PROBLEM 


San  Diego,  and  construction  was  begun  there  in 
the  sixties,  but  no  rails  were  ever  laid  by  that 
railroad  enterprise.  When  the  Boston  people 
came  to  build  the  Southern  California  road  they 
avoided  litigation  by  keeping  outside  the  old 
Scott  right  of  way. 

Senator  Bard  of  California  was  interested  in 
this  Ojai  property,  and  it  is  from  the  Bard  Oil 
Company  that  the  Pan-American  now  gets  title 
to  about  two  thousand  acres  of  surface  and  all 
the  mineral  rights  of  the  valley,  about  seven 
miles  long  and  two  and  a half  miles  wide.  On 
the  Sulphur  Mountain  side  of  this  valley  are  oil 
seepages  that  are  declared  to  be  the  greatest  in 
the  State.  On  the  other  side  of  the  valley  the 
cleavage  of  the  hills  reveals  the  entire  geological 
formation  so  that  it  can  be  followed  for  many 
miles.  The  oil  in  this  territory  varies  from  four- 
teen to  thirty-four  gravity  and  the  wells  are 
from  four  hundred  to  four  thousand  feet  deep. 

PRODUCTION  COSTS  IN  CALIFORNIA 

The  average  California  oil  well  will  yield  from 
one  hundred  to  two  hundred  barrels  per  day,  and 
six  hundred  barrels  is  a big  well.  Oil  wells  run- 
ning from  five  to  fifteen  barrels  have  been  auto- 
matically pumping  in  southern  California  for 


PRODUCTION  COSTS  IN  CALIFORNIA  111 


many  years  — something  of  a contrast  to  what 
one  sees  in  the  Mexican  oil  field.  Old  oil  wells 
are  being  remade  here  and  new  machinery  will 
be  installed  and  new  wells  driven.  Well  number 
36  on  the  side  of  Sulphur  Mountain  already  fur- 
nishes a beautiful  lubricating  oil  with  gasolene 
and  no  asphalt.  It  is  thirty-four  gravity  and  is 
worth  at  the  present  time  about  two  dollars  per 
barrel,  although  most  of  the  heavy  oil  in  this 
district  is  worth  about  seventy-five  cents  a 
barrel. 

Whether  an  oil  well  is  large  or  small,  the  cost 
of  oil  production  at  the  well  cannot  be  over  ten 
cents  per  barrel;  and  oil  can  be  pumped  one  hun- 
dred miles  at  a cost  of  one  cent  a barrel. 

The  Pan-American  people  are  at  work  on 
experiments  to  make  a cheaper  gasolene  motor 
oil  and  also  on  improvements  to  the  “cracking” 
process.  Cracking  oil  is  not  a new  invention  but 
it  is  the  basis  of  all  the  reports  and  promises  from 
Washington  for  cheapening  gasolene.  A heavy 
crude  oil  is  cracked  by  being  heated  to  a tem- 
perature of  eight  hundred  degrees  under  pres- 
sure with  hot  steam.  Oil  of  eight  and  a half 
gravity  is  thus  converted  into  an  oil  of  sixteen 
gravity  and  will  flow  like  water.  In  the  process 
oxygen  and  hydrogen  are  separated  and  new 


112 


THE  MEXICAN  PROBLEM 


chemical  compounds  are  formed  so  that  in  re- 
ality a new  combination  produces  a new  and 
lighter  oil.  It  is  said  that  oil  can  now  be  cracked 
at  a cost  of  three  and  a half  cents  per  barrel. 

The  Pan-American  people  realize  the  obliga- 
tion resting  upon  them  to  expand  the  market  for 
oils  in  every  possible  direction. 

The  report  of  the  Federal  Trade  Commission, 
that  found  Standard  Oil  interests  still  dominat- 
ing the  price  of  gasolene,  should  again  emphasize 
how  so-called  anti-trust  laws  are  responsible  for 
the  abolition  of  competition  and  really  prevent 
the  lowering  of  prices. 

The  Washington  report  shows  the  division  of 
gasolene  marketing  into  eleven  territorial  areas, 
nine  of  which  are  said  to  be  dominated  by  vari- 
ous Standard  Oil  companies,  which  produced 
more  than  sixty  per  cent  of  the  gasolene  in  1915 
and  made  sixty-five  per  cent  of  the  total  sales. 

I have  always  been  annoyed  in  shifting  my 
motor  gasolene  purchases  from  one  oil  company 
to  another  to  find  that  very  soon  the  price  for 
my  gasolene  was  regulated  by  the  Standard  Oil 
price  and  that,  notwithstanding  any  market 
conditions  or  supplies,  when  the  independent  oil 
man  had  hooked  me  on  as  a customer  he  was 
very  shortly  giving  nothing  but  Standard  Oil 


PRODUCTION  COSTS  IN  CALIFORNIA  113 


prices,  yet  claiming  no  connection  with  Standard 
Oil. 

I noted  that  in  California  gasolene  had  fluctu- 
ated from  twenty-two  to  twelve  and  back  to 
twenty,  and  in  southern  California  I declared, 
“Here  I shall  find  the  truth,”  as  gasolene  is  sold 
on  street  corners  by  more  than  a dozen  inde- 
pendent producing  and  refining  companies  com- 
peting with  more  than  one  hundred  Standard  Oil 
stations. 

Yet  when  I inquired  as  to  prices  and  conditions 
of  competition,  I found  that  prices  were  uniform 
and  that  competition  was  geographical  — a man 
bought  his  gasolene  at  the  nearest  gas  corner. 
Gasolene  users  do  not,  as  in  the  East,  maintain 
underground  gasolene  tanks  in  or  out  of  the 
garage  to  any  considerable  extent.  They  buy 
at  the  gas  corner  and  it  does  not  pay  to  run  a 
car  very  far  to  buy  its  fuel. 

Throughout  California,  and  most  notably  in 
Los  Angeles,  the  most  conspicuous  store  is  the 
gasolene  supply  store.  It  is  almost  always  on  a 
corner  vacant  lot,  often  set  in  a small  attractive 
garden,  into  which  the  car  moves  for  its  supply, 
the  curbstones  being  cut  down  on  both  sides  of 
the  corner.  These  houses  are  one-story  buildings 
of  glass  and  wood,  similar  to  the  headhouse  or 


114 


THE  MEXICAN  PROBLEM 


potting-room  of  a green  house.  Roof  and  sides 
are  painted  conspicuously  — the  Standard  Oil 
Company’s  always  in  red,  white,  and  blue  colors 
and  other  companies’  in  uniform  trade-mark 
colors.  All  kinds  of  oil  supplies  are  attractively 
arranged  on  the  shelves  within,  and  polite  at- 
tendants in  white  suits  remind  you  of  a combi- 
nation between  a certified  milk  dairy  and  a well- 
kept  green  house. 

COMPETITION  BY  SERVICE 

What  interested  me  most  was  the  problem  of 
how  all  these  corner  oileries  could  compete  with 
the  Standard  Oil  Company,  with  its  organiza- 
tion, system,  and  unlimited  capital.  I promptly 
found  the  answer  — they  did  not  compete  at  all. 
The  Standard  Oil  Company  fixed  the  prices  and 
everybody  else  made  the  same  price.  There  is  no 
difference  in  gasolene  of  the  same  specific  grav- 
ity, whether  made  by  the  Standard  Oil  Company 
of  California  or  the  Ventura  Oil  Company  of 
Boston  and  Los  Angeles.  The  California  people 
brought  up  in  the  oil  regions  know  the  fraud  of 
any  advertiser  who  declares  that  his  gasolene 
will  carry  a car  more  miles  than  the  gasolene  of 
his  neighbor,  if  it  is  of  the  same  gravity. 

The  competition  was  entirely  in  the  service 


INDEPENDENTS  AND  OIL  PRICES  115 


and  by  location,  and  I was  astonished  that  the 
Ventura  and  a dozen  other  companies  could 
maintain  oil  supply  stations  over  so  wide  a terri- 
tory in  competition  with  unlimited  capital.  It  is 
a matter  of  enterprise  in  management;  but  the 
prices  are  fixed  by  Supreme  Court  decisions 
and  anti-trust  legislation,  both  practically  for- 
bidding price  competition. 

Every  oil  producer  and  every  oil  seller  knows 
without  any  argument  what  he  is  up  against  — 
that  the  Standard  Oil  Company  can  sell  oil  in  as 
large  quantities,  as  well  refined,  and  at  as  low  a 
price  as  he  can  afford  and  if  need  be  a little 
lower. 

INDEPENDENTS  NOW  HOLD  UP  OIL  PRICES 

The  safety  of  the  independent,  therefore,  is 
the  umbrella  price  of  the  Standard  Oil  Company. 
He  cannot  hope  to  cut  out  the  Standard  Oil 
Company  business.  He  has  neither  the  capacity, 
the  supply,  nor  the  capital  for  a contest  of  endur- 
ance. Self-interest  requires  that  he  sell  at  the 
same  price.  He  cannot  get  more.  He  may  there- 
fore hold  his  own  by  the  location  of  his  supply 
stations.  If  he  attempts  to  get  less  he  only  lowers 
the  general  price  and  hurts  himself  and  every 
other  independent  producer,  and  does  not  bring 


116 


THE  MEXICAN  PROBLEM 


a frown  or  a wrinkle  upon  the  face  of  smiling 
Standard  Oil. 

The  “trust  octopus”  is  seconded  and  sup- 
ported in  price  and  service  by  all  the  independ- 
ents. Any  one  of  them  can  put  the  price  down  if 
he  wishes.  In  that  case,  his  enemies  would  be 
the  suffering  independent  producers  and  not  the 
Standard  Oil  Company,  which  usually  finds  a 
still  larger  profit  in  lower  prices  and  broader 
markets. 

The  position  of  the  Standard  Oil  Company  is 
exactly  that  of  the  big  copper  producer,  the  big 
steel  producer,  or  any  other  large  vendor  of  a 
raw  article.  The  producer  knows,  if  he  knows 
anything  about  business  economics,  that  the 
advancing  price  restricts  the  consumption  and 
a lower  price  enlarges  it.  What  he  wishes  is 
the  largest  possible  distribution  consistent  with 
profits.  Distribution  is  governed  by  the  minor- 
ity and  the  accumulation  of  supplies  lowering 
the  price  which  all  producers  are  mutually  inter- 
ested to  sustain.  At  the  lower  price  consump- 
tion is  broadened,  the  supply  is  decreased,  and  if 
the  leading  producer  does  not  advance  the 
quotation,  exhausting  supplies  will  do  it  auto- 
matically. 

On  an  advancing  market  producers  accumu- 


DON’T  ROCK  THE  BOAT  117 

late  supplies  which  automatically  check  the 
advance. 

There  is  perfect  action  of  the  law  of  supply 
and  demand  at  top  and  bottom,  but  intermedi- 
ately there  is  the  law  of  self-interest  placing  the 
so-called  trust  and  the  independent  upon  ex- 
actly the  same  basis  — mutual  maintenance  of 
price  and  profits;  with  competition  only  in 
service. 


“don’t  rock  the  boat” 

The  Supreme  Court  decisions,  the  regulations 
by  state  and  United  States  governments  and 
“anti-trust”  laws,  all  pressing  from  the  outside, 
force  all  producers  into  absolute  mutual  under- 
standing without  any  agreement  written  or 
oral. 

They  absolutely  boycott  the  government  de- 
cree and  that  without  conspiracy  or  combina- 
tion. They  understand  the  law,  “Don’t  Rock 
the  Boat.” 

When  the  government  shakes  its  finger  at  the 
large  company  and  tells  it  to  compete  and  de- 
stroy the  smaller  companies  and  decrees  aid  and 
comfort  to  the  smaller  producing  company  to  de- 
stroy the  larger  one,  it  makes  impossible  the  com- 
petition which  under  the  law  it  seeks  to  enforce. 


118 


THE  MEXICAN  PROBLEM 


COMPETITION  BOYCOTTED 

There  is  little  difference  in  human  action 
either  side  of  the  world.  On  the  western  side  of 
the  Pacific  the  Japs  have  attempted  to  dictate 
to  unarmed  China.  The  Chinaman  does  n’t  so 
much  as  wink.  He  just  lays  down  his  chopsticks 
and  refuses  to  buy,  serve,  or  eat  a piece  of  Jap- 
anese fish,  and  the  Japs  see  the  point  of  distress 
and  starvation  before  the  Chinese  feel  it.  The 
Japs  threatening  the  Chinese  make  them  a unit 
without  other  understanding  than  that  of  mu- 
tual self-interest. 

Throughout  the  United  States  the  oil  pro- 
ducers and  selling  agencies  boycott  the  govern- 
ment edict  and  refuse  to  cut  each  other’s  throats 
in  price  competition.  The  Standard  Oil  Com- 
pany can  laugh  at  all  Supreme  Court  decrees. 
They  continue  to  live  under  the  law  which  by 
the  same  breath  demands  that  they  compete 
and  destroy  the  small  man  and  go  to  jail  for 
doing  it. 

The  result  throughout  the  United  States  is 
higher  prices  for  oil;  for  when  the  Standard  Oil 
Company  had  a monopoly,  it  had  a responsi- 
bility concerning  rising  prices,  and  would  con- 
serve supplies,  pass  them  from  surplus  territories 


COMPETITION  BOYCOTTED 


119 


to  exhausted  territories,  stimulate  production  to 
prevent  erratic  movements,  and  balance  the 
markets  to  prevent  wide  fluctuations. 

Now  the  government  has  stepped  in  as  a reg- 
ulator, and  the  Standard  Oil  Company  has  no 
responsibilities;  its  valuations  have  multiplied 
fivefold,  and  Mr.  Rockefeller  is  worth  more 
hundreds  of  millions  than  he  ever  dreamed  of, 
and  this  by  legislative  and  Supreme  Court  de- 
cree and  his  own  helplessness. 

Washington  has  decreed  in  the  oil  business, 
the  copper  business,  and  the  steel  business  a 
capital  socialism  — where  the  weak  protect  the 
strong  and  the  strong  must  permit  it. 


CHAPTER  XII 


DOHENY  — LORD  OF  OIL 

More  than  sixty  years  ago  two  boys  were  born 
about  twenty  miles  and  three  years  apart  in  the 
State  of  Wisconsin.  They  were  destined  to  be 
thoroughly  American  boys,  but  the  parents  of 
both  were  born  in  Ireland.  One  became  Lord 
Shaughnessy,  the  head  of  the  Canadian  Pacific, 
and  the  greatest  power  for  good  to-day,  both  in 
war  and  peace,  in  the  northern  half  of  the  North 
American  continent.  The  other  was  Edward 
L.  Doheny,  lord  of  oil  in  the  southwest  of  North 
America.  Shaughnessy  and  Doheny,  although 
born  in  the  same  State  and  so  near  each  other, 
and  of  parents  from  the  Emerald  Isle,  never 
met  until  within  a year.  Yet  for  many  years 
Shaughnessy  had  watched  Doheny ’s  progess  in 
the  Southwest,  for  Shaughnessy  wants  oil  in  the 
future  for  one  hundred  Canadian  Pacific  ships. 

I pen  these  lines  in  absolute  independence  of 
both,  for  if  they  had  any  power  over  me  or  any 
knowledge  that  I am  writing  this,  the  full  limit 
of  censorship  against  any  personal  encomiums 


DEVELOPED  BY  PLAINS  AND  HILLS  121 


would  be  placed  upon  me.  I asked  Doheny  in 
Mexico  what  I might  say  concerning  the  situa- 
tion, and  he  replied:  “Nothing  about  me  or 
especially  about  my  properties.  We  can  take 
care  of  ourselves,  but  help  the  people  of  Mexico 
if  you  can.” 

DEVELOPED  BY  THE  PLAINS  AND  THE  HILLS 

Edward  L.  Doheny  is  of  public  interest  be- 
cause he  spans  in  his  life  and  activities  the 
western  pioneer,  bivouacking  on  the  prairies 
and  seeking  the  development  of  wealth  from 
the  mountains  and  the  plains,  and  the  new  era 
of  heat,  light,  and  power  which  is  coming  from 
mineral  oil. 

When  Doheny  graduated  from  the  high  school 
in  Wisconsin,  he  knew  his  botany  and  his  miner- 
alogy like  the  American  youth  of  advanced  edu- 
cation ; but  to-day  he  knows  it  as  do  few  people 
in  the  world.  His  life  on  the  plains  taught  him 
to  know  the  sage  brush  of  the  desert  for  its  roots 
holding  the  sands  against  the  winds  and  its 
blossom  yielding  up  to  the  bees  the  most  deli- 
cious honey.  He  knows  all  the  flowers  of  the  hills 
and  the  mountain  side  and  he  knows  the  rocks 
and  the  minerals  they  cover  as  do  few  men.  He 
knows  how  these  minerals  were  deposited,  their 


122 


THE  MEXICAN  PROBLEM 


dips,  the  sedimentary  deposits,  shales,  and  sands, 
and  the  basaltic  and  volcanic  upheavals. 

He  dwells  in  a garden  with  one  of  the  largest 
collections  of  palms  that  any  man  ever  gathered. 
He  knows  every  palm  whether  he  sees  it  in  his 
garden  or  on  the  desert.  Somehow  he  respects 
the  botanical  names  of  more  than  a hundred 
palms,  probably  because  they  have  no  common 
names,  but  he  manifests  a contempt  for  the 
geological  names  as  applied  to  minerals.  He 
declares  that  geological  names  never  yet  found 
minerals  or  oil,  nor  have  the  geological  professors 
been  very  successful  in  directing  any  one  how  to 
find  them. 

INDEPENDENT  OF  MAN  OR  BEAST 

For  many  years  Doheny  slept  on  the  plains  and 
in  the  mountains  with  his  rifle  by  his  side,  and 
he  always  knew  exactly  where  his  boots  were, 
where  every  piece  of  his  pack  lay  and  what  were 
his  resources  and  the  journey  before  him.  He 
never  carried  water  or  timber  if  he  knew  where 
to  find  it.  But  he  carried  the  tools  in  his  kit  that 
could  cut  or  file  a piece  of  steel,  mend  a rifle,  and 
insure  him  independence  of  any  man  or  beast  on 
top  of  Mother  Earth. 

He  believes  that  the  minerals  were  originally 


INDEPENDENT  OF  MAN  OR  BEAST  123 


deposited  almost  universally  on  the  earth’s  sur- 
face and  were  then  ploughed  by  glaciers  and  torn 
by  upheavals  and  leached  and  redeposited  into 
cracks  or  deposits  of  various  forms;  yet  you  get 
them  where  you  find  them.  But  when  you  reach 
the  end  of  the  deposit,  don’t  gamble  too  much 
money  in  looking  for  a continuation  of  that  de- 
posit or  for  the  next  one.  He  says  that  when  you 
dig  a well  and  get  water,  you  won’t  find  oil,  and 
when  water  comes  in,  that  is  the  end  of  your  oil. 

Frank  A.  Vanderlip,  of  the  National  City  Bank, 
about  a year  ago  paid  a million  and  a half,  or 
one  hundred  dollars  an  acre,  for  fifteen  thousand 
acres  covering  the  San  Pedro  mountain,  an  ocean 
point  on  the  Pacific  not  far  from  Los  Angeles.  It 
has  beautiful  views  from  the  hilltop  into  valleys 
both  sides  and  out  over  the  ocean.  But  Doheny 
had  first  looked  at  it  for  several  days  and  paid 
one  thousand  dollars  a day  for  the  privilege.  He 
found  there  were  some  oil  seepages  on  the  prop- 
erty, but  the  district  did  not  indicate  to  his 
practiced  eye  that  he  could  get  his  money  back 
with  a profit  from  either  oil  or  land  sales.  But 
Doheny  could  slip  over  the  mountains  to  the 
northeast  and  buy  the  beautiful  Ferndale  Ranch 
for  another  summer  home  for  Mrs.  Doheny,  with 
its  running  waters,  palms  and  orange  groves. 


124 


THE  MEXICAN  PROBLEM 


and  consider  it  a good  investment  because  it  was 
worth  it  without  regard  to  the  oil  derricks  loom- 
ing on  the  hillside  in  the  distance. 

SUPREME  FAITH  IN  OIL 

Between  the  Ferndale  Ranch  and  Sulphur 
Mountain  we  rested  for  a few  moments  to  note 
the  oil-bearing  shale  on  the  face  of  both  moun- 
tains at  the  head  of  Ojai  Valley;  one  dipping 
south  and  the  other  dipping  north.  Some  of  the 
party  looked  for  trout  in  the  brook,  but  Doheny 
noted  a ten-inch  curl  of  black  oil  ooze  out  from 
the  spring  by  the  brookside  and  flow  down 
stream. 

“Look  at  that,”  he  shouted.  “That  is  worth 
more  than  all  the  trout  in  all  the  springs  and 
streams  in  America.  You  can  put  trout  in  the 
stream,  but  you  can’t  put  oil  in  the  ground.” 

Then  we  passed  on  through  the  cypress  and 
the  yew  trees  and  filled  our  pockets  and  mouths 
with  sun-kissed  oranges,  and  then  down  the 
valley  of  the  Santa  Clara,  noting  the  oil  derricks 
on  the  south  mountains  across  the  valley,  some 
of  them  belonging  to  the  Ventura  Oil  Company 
and  some  of  them  to  Doheny,  for  Doheny’s  in- 
terests in  California  about  equal  his  interests  in 
Mexico. 


NEAR  TRES  HERMANOS 


SUPREME  FAITH  IN  OIL 


125 


The  main  ranch  or  home  farm  of  Doheny  is 
ten  miles  out  of  Los  Angeles,  eight  hundred  acres 
on  the  mountain  side,  and  still  it  is  not  the  ex- 
tensive gardens,  orange  groves,  fish  hatchery, 
duck  ponds,  cemented  driveway  up  the  moun- 
tain, or  his  developed  underground  river,  or  the 
beautiful  blue  lilac  bushes,  that  interest  Doheny 
to  the  greatest  extent;  nor  yet  the  opportunity 
here  for  a vigorous  outing,  a seven  o’clock  break- 
fast, and  a beautiful  view  across  the  valley.  It  is 
the  little  seepage  of  oil  in  the  sidewalk  that  in- 
dicates that  again  Doheny  sits  atop  of  wealth 
that  he  can  sometime  at  his  good  pleasure  mint 
into  gold  and  human  uses. 

Doheny  not  only  knows  men,  but  he  believes 
in  men  of  the  right  sort.  T.  A.  O’Donnell,  a 
director  of  the  Pan-American  Oil  Company, 
Doheny  declares  to  be  the  best  oil  operator  in 
California.  He  says  he  will  get  twice  as  much  oil 
out  of  a well  as  other  operators.  When  an  oil 
well  stops  with  O’Donnell  it  is  going  again  in  an 
hour.  With  some  other  people  an  oil  well  may 
be  going  again  within  two  or  three  days,  but 
the  fellow  that  keeps  his  oil  well  going  will  get 
the  oil,  because  the  oil  is  all  the  time  flowing 
toward  him. 


126 


THE  MEXICAN  PROBLEM 


YOUTH  AND  ENTHUSIASM  STILL  WITH  HIM 

Doheny  is  an  enthusiast.  When  he  goes  into 
a thing,  he  is  in  all  over,  hands  and  feet.  He  will 
travel  longest  with  the  swiftest  and  the  strongest, 
swim  or  ride  with  the  youngest,  and  sleep  more 
or  less  in  any  part  of  the  twenty-four  hours.  He 
will  absorb  more  and  his  interest  and  his  sym- 
pathies will  be  of  the  broadest  because  his  stud- 
ies and  his  sympathies  reach  from  the  stars  of 
heaven  to  the  lowest  mineral  deposits  and  his 
interest  is  all  the  while  in  humanity  and  its  on- 
ward progress. 

In  the  forenoon,  over  on  the  side  of  Sulphur 
Mountain,  he  dipped  his  fingers  in  the  thirty- 
four  gravity  oil  oozing  from  well  Number  36  and 
exclaimed  enthusiastically:  “Isn’t  that  fine? 
Is  n’t  it  better  than  soup  or  something  to  eat? 
Just  smell  it!  It  is  a soft,  lubricating  oil  with  no 
asphaltum.”  And  he  dipped  up  a pan  of  it  and 
we  all  had  to  note  it,  smell  it,  and  admire  it. 
Then  he  took  a wisp  of  oil  waste  from  the  auto- 
mobile and  wiped  his  hands  as  clean  as  those  of 
a woman  and  was  off  in  the  motor  to  dip  into 
another  oil  well  and  note  its  color,  its  thickness, 
and  its  gravity. 

As  I write  this  in  the  East,  comes  the  report 


EARLY  IN  BUSINESS 


127 


from  that  Number  36  oil  well  that  its  flow  has 
increased  to  twenty-five  barrels  a day;  and  it  is 
just  what  Doheny  said  it  was, — pure,  lubricat- 
ing oil,  with  no  asphaltum,  but  a little  higher 
grade  at  thirty-seven  gravity. 

EARLY  IN  BUSINESS 

At  seventeen  years  of  age  Doheny  was  with  a 
United  States  government  surveying  party  in 
the  Indian  Territory.  As  a side  line,  he  took 
to  trapping  wild  animals.  Many  a wolf-skin 
he  cashed  in  at  the  trading-post,  but  he  early 
showed  his  independence.  When  trapping  one 
winter  with  a friendly  Indian,  one  of  Doheny ’s 
pelts  was  claimed  as  taken  from  a wolf  nearest 
the  Indian’s  trap.  Doheny  protested.  He  said 
the  hunting  law  might  well  be  that  a dead  ani- 
mal belonged  to  the  nearest  trap,  but  snow  on 
the  ground  showed  that  that  animal  came  from 
his,  Doheny ’s,  trap. 

The  Indian  stood  by  the  law  and  Doheny 
stood  by  the  fact  and  they  separated.  Doheny 
declared  that  no  rule  of  the  hunt  could  give  his 
kill  to  another  trap  when  it  was  clearly  shown 
by  the  snow  tracks  it  did  not  belong  there. 

Doheny  was  soon  again  in  business  for  himself. 
With  a partner  he  bought  at  auction  over  sev- 


128 


THE  MEXICAN  PROBLEM 


enty  head  of  government  horses  for  about  five 
dollars  each  and  drove  them  into  Kansas;  and 
all  through  the  summer  months  he  was  break- 
ing in  the  horses  and  selling  them  to  farmers 
at  twenty-five  dollars  a head.  Doheny  and  his 
partner  felt  sure  they  had  done  the  greatest 
stroke  of  their  lives.  Each  then  thought  that  if 
he  could  get  an  income  of  one  thousand  dollars 
a year  he  would  be  rich. 

But  the  lure  of  the  mines  followed  the  lure  of 
the  forest,  and  Doheny  was  soon  up  north  pros- 
pecting for  gold,  and  for  many  years  he  mined 
and  prospected  through  the  Rocky  Mountains, 
especially  in  New  Mexico  and  Arizona.  He  was 
running  a good  sized  mine  in  New  Mexico  and 
making  ten  dollars  a ton  when  the  McKinley 
tariff  put  him  out  of  business. 

His  ore  had  a value  of  about  fifteen  dollars  a 
ton,  and  he  could  smelt  it  at  El  Paso  at  five 
dollars  a ton  and  get  ten  dollars  a ton  profit. 
The  McKinley  tariff  put  a duty  on  lead  ores  and 
made  Monterey  in  Mexico  the  greatest  smelting 
center  in  the  world.  The  El  Paso  people  could 
not  get  their  lead  flux  except  at  heavy  duty  and 
therefore  had  to  charge  Doheny  fifteen  dollars 
a ton. 

This  sent  Doheny  to  southern  California.  His 


NO  GAMBLING 


129 


quick  eye  detected  some  black  stuff  being 
hauled  over  the  streets  to  a furnace.  He  made 
investigation,  and  soon  he  and  Canfield  had 
leased  ground  and  with  shovel  and  hand  wind- 
lass were  opening  the  Los  Angeles  oil  field.  It 
was  hard  work  and  there  was  a long  fight  ahead 
of  them,  but  they  won  out  and  the  Los  Angeles 
oil  field  proved  up  exactly  what  Doheny  had  de- 
clared it  would  yield;  and  many  of  Doheny ’s 
old  Los  Angeles  wells  are  still  automatically 
pumping. 

INTO  OIL 

This  was  Doheny’s  first  venture  in  oil,  and  oil 
has  been  in  his  blood  and  bone  ever  since. 

Doheny  is  distinctively  a prospector  and  not 
a gambler.  He  would  not  play  a game  of  cards 
for  a ten-cent  piece.  He  never  took  a drink  in 
his  life,  and  he  never  smokes.  But  as  a prospector 
he  will  hit  the  rock  and  do  his  drilling  to  the  end 
of  the  lead;  but  when  he  reaches  the  end,  the 
prospect  is  determined  and  no  blind  gambling  or 
groping  in  the  dark  follows  — he  quits. 

NO  GAMBLING 

I could  take  you  to  one  place  in  California 
where  the  Standard  Oil  Company  has  spent 


130 


THE  MEXICAN  PROBLEM 


$2,500,000  with  not  a cent  to  show  for  it. 
Doheny  was  previously  in  that  district  and  it 
cost  him  just  $8000  to  put  down  his  well  and 
learn  that  any  further  expense  would  be  gam- 
bling. He  had  paid  his  $8000  and  gotten  his 
information.  The  Standard  Oil  Company  put 
$2,500,000  in  the  same  district  later  and  still 
has  no  further  information. 

But  just  afterwards  Doheny  heard  of  a prom- 
ising piece  of  oil  land  offered  for  option.  He  in- 
quired and  learned  that  an  adjoining  property 
was  known  to  be  better.  He  took  a third  ob- 
servation and  learned  that  the  cream  of  the 
district  was  held  for  $2,250,000,  while  the  poorer 
part  could  be  had  for  one  or  two  hundred  thou- 
sand dollars.  He  promptly  took  the  option  on 
the  best  part,  paid  down  his  ten  per  cent,  drove 
his  wells  and  paid  the  balance,  $2,000,000,  out  of 
the  product  from  the  wells.  He  quit  that  district 
$8,000,000  to  the  good. 

Then  he  opened  another  district  and  took  out 
another  $8,000,000.  He  was  the  pioneer  in  the 
Bakersfield  district,  drilling  the  first  well  and 
selling  the  first  product  from  the  district.  In  the 
early  days  of  Bakersfield  he  was  selling  oil  at 
$1.25  a barrel  to  twenty-one  other  drilling  out- 
fits. With  the  two  oil  fields  he  is  now  opening  up 


STANDING  BY 


131 


for  the  Pan-American,  Mr.  Doheny  will  have 
opened  up  eight  oil  fields  in  California. 

STANDING  BY 

From  the  Fullerton  and  other  districts  in 
California  he  got  the  money  to  make  his  start 
in  Mexico,  where  at  the  beginning  he  had  only 
an  eight  per  cent  interest,  but  assessments  of 
$750,000  from  1902  to  1905  did  not  trouble  him. 
When  the  Texas  oil  gushers  made  Mexican  oil 
practically  worthless  for  a few  months,  Doheny 
stood  by,  just  as  Rockefeller  did  in  Cleveland, 
and  bought  when  nobody  else  would  buy,  believ- 
ing that  the  future  would  demonstrate  the  val- 
ues. Doheny’s  Mexican  Petroleum  interest  went 
up  to  nearly  forty  per  cent  as  his  associates  sold 
out. 

Doheny  has  always  stood  by.  In  the  panic  of 
1907  he  kept  millions  on  deposit  that  his  prop- 
erties might  be  protected  against  any  accident. 
Five  years  ago  he  disposed  of  some  properties  for 
more  than  $10,000,000,  and  half  of  the  money 
went  into  Mexican  Petroleum.  I don’t  think  that 
he  values  his  Mexican  interests  financially  as 
high  as  his  California  interests,  but  the  social 
problem  in  Mexico  interests  him  more  and  takes 
greatest  hold  upon  his  sympathies. 


132 


THE  MEXICAN  PROBLEM 


Tampico  was  a cattle  shipping  point  with  less 
than  twenty  thousand  people  when  he  began 
operations  there.  To-day  it  has  a population  of 
fifty  thousand,  and  wages  that  were  twelve  and 
one-half  cents  are  now  one  dollar  for  ordinary 
labor  and  three  dollars  and  fifty  cents  gold  for 
skilled  labor.  When  in  June,  1916,  nine  hun- 
dred refugees  were  taken  from  Tampico  on  two 
tank  steamers  and  the  yacht  Casiana,  the  ex- 
pense was  sixty-seven  thousand  dollars  and  the 
American  government  offered  to  repay,  but 
Doheny  refused  to  accept.  From  October  14, 
1915,  until  April  15,  1916,  there  was  famine  in 
that  land  for  the  native  population.  The  war- 
ring forces  had  taken  all  the  food  out  of  the 
country  and  sent  it  to  Vera  Cruz,  whence  it  had 
been  shipped  to  Texas  and  sold  for  war  supplies. 

Doheny  bought  it  in  Texas  and  shipped  it 
back  in  the  same  packages  to  Tampico  and  fed 
the  native  Mexicans  with  it  so  far  as  the  Ameri- 
can consul  certified  they  had  need  for  food. 

Doheny  is  a delver  in  statistics,  and  these 
ground  him  in  his  faith  in  the  great  future  for  oil 
in  the  uses  of  the  world.  He  believes  that  the 
time  will  arrive  when  coal  locomotives  can  be 
used  profitably  only  in  the  coal  regions.  It  has 
been  demonstrated  that  an  oil-burning  engine 


HUASTECA  PETROLEUM  COMPANY  SUPPLYING  NATIVES  WITH  FOOD  BROUGHT  BY 
ITS  TANKERS  FROM  THE  UNITED  STATES,  DURING  WAR  TIMES  IN  MEXICO 


STUDIES  PAST,  PRESENT,  FUTURE  133 


can  carry  a train  from  New  York  to  the  Pacific 
Coast  and  back  to  New  York  without  refueling. 

Of  course  the  expected  railroad  development 
in  the  oil  line  cannot  take  place  during  the  war 
time,  when  the  American  oil  reserves  are  being 
drawn  down  two  million  barrels  a month.  Never- 
theless, oil-burning  locomotives  are  operating 
in  twenty-one  States  on  fifty-three  roads,  and 
on  thirty-two  thousand  miles  of  road,  and  con- 
suming forty-two  million  barrels  of  oil  per  an- 
num. 

STUDIES  PAST,  PRESENT,  AND  FUTURE 

It  is  not  only  oil  in  the  future  and  the  man  in 
the  future  that  interest  Doheny,  but  the  oil  of 
the  past,  the  man  of  the  past,  and  the  animal 
and  mineral  life  of  the  past. 

Five  years  ago  Doheny  and  Canfield  used  to 
note  deposits  of  bones  in  asphalt  about  eight 
miles  out  from  Los  Angeles,  whence  tons  of 
asphalt  had  been  taken  for  road  making.  “What 
a fool  rancher  to  lose  so  many  sheep  in  tar  beds,” 
they  said;  “why  did  n’t  he  fence  out  the  sheep?” 
Then  somebody  noted  that  there  was  not  a 
sheep  bone  in  the  lot.  In  came  the  scientists 
to  solve  the  riddle. 

Now  bones  of  the  elephant,  the  ground  sloth, 


134 


THE  MEXICAN  PROBLEM 


the  mastodon,  the  bison,  the  horse,  the  camel, 
the  bear,  the  coyote,  and  the  giant  wolf  are 
mounted  or  are  being  mounted  for  the  Museum 
of  History,  Science  and  Art  in  the  Exposition 
Park  of  Los  Angeles,  and  there  are  fifteen  thou- 
sand boxes  of  bones  still  unassorted.  As  many 
as  thirty  skulls  of  the  saber-tooth  tiger  or  cat, 
together  with  fifty  skulls  of  the  giant  wolf, 
were  found  in  a space  of  less  than  four  cubic 
yards. 

Mother  Earth  here  hermetically  sealed  up 
the  animal  life  of  many  hundred  years  ago,  and 
the  museum  and  the  ranch  La  Brea,  of  twenty- 
five  acres,  now  the  property  of  the  State,  will 
be  of  interest  to  the  scientist  and  the  student  for 
many  hundred  years  to  come.  From  this  place 
came  the  skull  and  skeleton  of  a woman  eight 
thousand  years  old.  Many  animal  contests 
must  have  occurred  about  this  water  and  tar 
hole,  for  animal  bones  are  found  chewed,  and 
some  partially  healed. 

To  Doheny,  the  man  of  the  plain  and  the 
mountain,  deep  and  broad  delver  in  Mother 
Earth,  these  bones,  the  life  of  the  past  they  re- 
veal for  man, — beast  and  vegetable  life, — have 
the  deepest  interest;  for  Doheny  seems  to  have 
the  genius’s  insight  into  the  history  of  the  past, 


WATCHMAN!  WHAT  OF  THE  NIGHT?  135 


the  meaning  of  the  present,  and  the  hope  of  the 
future. 

Yet  Doheny  does  not  work  altogether  by  eye- 
sight. His  associates  note  that  he  will  not  make 
important  moves  on  the  chessboard  of  business 
until  the  time  or  something  within  him  seems 
to  be  right,  and  then  he  moves  swiftly,  surely, 
and  independently.  But  until  the  spirit  moves 
within  him,  nothing  can  stir  him. 

WATCHMAN!  WHAT  OF  THE  NIGHT? 

Working  within  his  soul  at  the  present  time 
is  the  question  of  the  future  of  Mexico.  He  can- 
not see  it  clearly.  He  can  see  Los  Angeles,  in 
the  center  of  the  uncounted  wealth  of  southern 
California,  reaching  toward  a million  popula- 
tion, and  note  the  meaning  of  an  automobile  to 
every  five  people  in  the  town.  He  can  rejoice 
as  telegrams  come  from  Tampico  reporting  that 
the  dredging  and  the  river  current  in  the  three 
months  this  spring  have  deepened  the  bar  chan- 
nel from  seventeen  feet  to  over  twenty-six  feet. 
He  is  pleased  that  men  of  Tampico  are  now 
getting  more  than  ten  times  the  wages  per 
day  they  received  before  he  went  there.  He  is 
happy  to  note  that  every  one  of  them  was  so 
well  cared  for  at  the  Mexican  Petroleum  Com- 


136 


THE  MEXICAN  PROBLEM 


pany  terminal  that,  when  in  April  the  I.W.W. 
workers  stirred  up  revolt  in  four  oil  refineries  at 
Tampico,  there  was  not  a whisper  of  trouble 
among  his  men.  They  told  me  at  the  Tampico 
terminal  that  under  proper  direction,  with  good 
food  and  care,  the  Mexican  workers  could  be 
relied  upon  for  anything,  and  in  an  emergency 
would  work  thirty-six  hours  or  forty-eight  hours 
on  a stretch  with  their  meals  brought  to  them, 
and  that  they  were  loyal  and  true. 

What  troubles  Dolieny  is  how  these  good  peo- 
ple of  Mexico,  speaking  one  hundred  and  fifty- 
three  tongues,  can  be  merged  into  a nation, 
wTith  soul  life,  prosperity,  and  family  and  na- 
tional happiness. 

That  is  the  Doheny  problem!  That  is  the 
United  States  problem!  That  is  the  Mexican 
problem ! 


THE  END 


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| Lands  of  Mexican  Petroleum  Company 
Limited  of  Delaware,  and  Subsidiaries. 
=*=‘  Shows  Pipe  Lines  & Pump  Stations  from 
Te.rminal  to  Cerro  Azul;  also  Railway 
Line  from  San  Geronimo  to  Cerro  Azul. 


(Ct)£  Jfttoertfibe  prestf 

CAMBRIDGE  . MASSACHUSETTS 


U . S . A 


HC135.B3 

The  Mexican  problem. 


Princeton  Theological  Semmary-Speer  Library 


